Ghana and the International Monetary Fund (IMF) have reportedly reached a staff-level agreement for a US$3 billion economic support that will be announced today Tuesday, December13.
The sources said the relief package will be paid over a possible three-year period.
Details of the agreement will be announced at a joint press conference by the Finance Ministry, IMF and the Bank of Ghana Tuesday morning.
Domestic debt exchange
Finance Minister Ken Ofori-Atta has been rolling out policies including domestic debt restructuring aimed at restoring macroeconomic stability.
He announced that the government is working hard to “minimise the impact of domestic debt exchange on investors holding government bonds.”
Ofori-Atta gave assurance to “small investors, individuals and other vulnerable groups” that their investments are safe.
“We are confident that these measures will contribute to restoring macroeconomic stability,” Ofori-Atta said.
“Treasury bills are completely exempted and all holders will be paid the full value of their investments on maturity. There will be no haircut on the principal of bonds. Individual holders of bonds will not be affected,” he added.
TUC raises red flag
Meanwhile, the Trades Union Congress (TUC) said the government should exempt its members’ pension funds from the debt exchange programme.
According to them, the programme will negatively affect the security of their retirement income.
“We have analysed the debt exchange programme and after a thorough analysis of the programme and a very extensive discussion among the leadership of TUC and affiliates, our conclusion is very firm. And it is that the programme will negatively affect the pension funds of our members and consequently their retirement income security,” the general secretary of TUC Dr Anthony Yaw Baah said at a press conference Monday (12 December).
Immense pressure
There is immense pressure on the government to turn things around, with inflation hitting a record 40% in October. Traders closed their shops last month to protest the rising cost of goods and services as citizens decry the high cost of living.
Presenting the 2023 budget in parliament in November, Ofori-Atta, who survived a censure motion recently, said depreciation of the cedi continues to be a huge problem as the government strives to address the country’s current challenges.
“The demand for foreign exchange to support our unbridled demand for imports undermines and weakens the value of the cedi,” he said. “This contributed to the depreciation of the cedi, which has lost about 53.8 percent of its value since the beginning of the year. Compared to the average 7 percent average annual depreciation of the cedi between 2017and 2021, the current year’s depreciation, which is driving the high costs of goods and services for everyone, is clearly an aberration – a very expensive one.”
As part of the measures to get the economy back in shape, Ofori-Atta announced a freeze on new tax waivers for foreign companies, a review of tax exemptions for mining, oil and gas companies and a reduction in the fuel allocation to government appointees.