The International Monetary Fund (IMF) has said Ghana has to show proof that its debt levels are sustainable before they can approve an economic support program for the country.
The Director of IMF’s African Department, Mr. Abebe Aemro Selassie told the media in Washington on October 14, that the country also needed a credible economic reform plan before an agreement for a fund-assisted program could be reached.
While insisting that the IMF is responsive to the urgency of the country’s bailout request, the Director of the IMF’s African Department said so much will depend on how quickly the reform plan can be fleshed out for implementation.
Responding to a question on when the country could expect a fund-assisted program to help shore up reserves, curtail extreme price increases and regain market and investor confidence, Mr. Selassie said there are also important initiatives that have to be taken in terms of how the program will be financed, before proceeding.
The press conference formed part of the 2022 IMF/World Bank annual meetings that ended on October 16.
The debt stock peaked at GH¢402.4 billion in September, is equivalent to 68 per cent of GDP, and the debt service cost is estimated to be consuming more than 80 per cent of total revenue and grants.
Before joining the highly indebted poor countries (HIPC) in early 2000, the debt service burden was around 72 per cent of total revenue and grants.
On the debt sustainability precondition, Mr. Selassie explained that the IMF always insisted on lending to countries with sustainable debts as a way to ensure that finances and resources from a fund-assisted program are channeled into critical areas that impacted lives and the economy.
Consequently, he said the IMF is awaiting the results of a debt sustainability analysis exercise and the credible economic reform plan from the Government to be able to determine when a deal could be sealed.
He said the reform plan had been presented but was now being interrogated by the fund staff and the Government.