Ghana Secures $1.32 Billion from IMF and World Bank to Address Budget Deficit

Ghana will receive US$1.32 billion from the IMF and World Bank to cover 35% of its 2025 budget deficit. The IMF will provide US$720 million and the World Bank US$600 million. The government plans to finance the remaining deficit through domestic borrowing and is committed to maintaining fiscal discipline.

Ghana is poised to receive a financial support package totaling US$1.32 billion from the International Monetary Fund (IMF) and the World Bank to address 35 percent of its budget deficit for the year 2025. According to Finance Minister Dr. Cassiel Ato Forson, the assistance comprises US$720 million from the IMF’s Extended Credit Facility (ECF) and US$600 million from the World Bank’s Development Policy Operation (DPO).

Dr. Ato Forson emphasized that the country’s cash deficit, amounting to GH¢56.9 billion, will be financed through both foreign and domestic sources. Specifically, foreign net financing is projected to reach GH¢21.4 billion, which constitutes 1.5% of Ghana’s GDP. The anticipated foreign inflow will include disbursements from the IMF and World Bank initiatives.

To address the remaining 65 percent of the deficit, which is GH¢36.9 billion (equivalent to 2.6% of GDP), the government plans to rely mainly on domestic borrowing, primarily through short-term treasury bills. This strategy is part of a broader effort to restore macroeconomic stability and ensure sustainable debt management following a period of fiscal challenges.

The IMF-ECF programme aims to support Ghana in achieving macroeconomic stability and fiscal sustainability, while the DPO from the World Bank is focused on fostering essential policy reforms and enhancing economic recovery. The Minister affirmed the government’s dedication to maintaining fiscal discipline and effective use of the funds to meet its fiscal challenges.

In summary, Ghana’s government is set to receive US$1.32 billion from the IMF and World Bank to address a significant portion of its budget deficit for 2025. With US$720 million from the IMF and US$600 million from the World Bank, the government aims to restore macroeconomic stability through prudent financial management. Domestic borrowing will also play a critical role in financing the remaining deficit, demonstrating the government’s commitment to sustainable fiscal policies.

Original Source: www.ghanaweb.com