The Ghana government has committed to limiting the annual disbursement of funds from loans contracted before the International Monetary Fund (IMF) bailout to only US$250 million until 2025.
This measure aims to align disbursements with IMF programme targets while addressing the challenge posed by a significant volume of undisbursed funds from prior commitments. Ghana secured substantial loans before the IMF bailout, with undisbursed bilateral loans alone estimated at US$3.8 billion.
This directive follows an assessment from an IMF staff report, which emerged after the second review of Ghana’s 36-month Extended Credit Facility Arrangement. The report highlighted that undisbursed amounts under external bilateral and commercial facilities signed before the debt restructuring were larger than initially anticipated, presenting a considerable obstacle to achieving debt targets.
“The authorities will carefully monitor disbursements associated with bilateral and commercial projects signed before December 2022,” the IMF report stated. This vigilant oversight is crucial to ensuring that project disbursements align with programme parameters. This commitment places significant limits on the number of stalled projects that can be restarted since the government cannot exceed the US$250 million ceiling.
Despite previous public statements by President Akufo-Addo and Finance Minister Dr. Mohammed Amin Adam about restarting stalled projects, the new cap is necessary to comply with IMF conditions. Instead, Ghanaian authorities, in collaboration with the Official Creditors Committee (OCC), will closely monitor disbursements, assessing project maturity, socio-economic impact, expected disbursement timelines, and debt service obligations.
Dr. Mohammed Amin Adam conceded to the importance of maintaining debt sustainability and achieving macroeconomic objectives through this new target. To support this initiative, a monthly intra-government monitoring mechanism will be established to ensure adherence to the US$250 million annual limit. Coordination with bilateral creditors, outlined in a Memorandum of Understanding (MoU) with the OCC, will be pivotal in managing these disbursements.
Ghana has however requested an adjustment to allow an additional US$172 million in borrowing for security-related expenditures. Looking ahead, a comprehensive assessment of potential future disbursements from bilateral and commercial partners is planned for completion by August 2024. This assessment will inform prioritization strategies aimed at aligning future disbursements with program parameters and debt sustainability goals.
