IMF Bailout: Ofori-Atta Begs International Lender To Double Support From $1.5 Billion To $3 Billion

• The Finance Minister has doubled the support he is requesting from the IMF from $1.5 billion to $3 billion
• According to a Bloomberg report, the years for repayment of the bailout amount have also increased from two to three years
• Ghana went to the IMF after challenges to stabilise its debt stock, which has increased to 78.3% of gross domestic product at the end of June 2022

Finance Minister has increased the amount he is requesting from the International Monetary Fund (IMF) for balance of payment support for Ghana from almost $1.5 billion to $3 billion.

According to Bloomberg, its sources at the Finance Ministry said the increased bailout fund is part of moves by minister Ken Ofori-Atta to brace weak financial standing and give global market investors confidence.

In a report filed on Monday, August 8, 2022, Bloomberg said the years for repayment of the bailout amount would also increase from two to three years.

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Ghana cedi has become a junk currency - US economist Steve Hanke jabs

An IMF spokesperson said the Extended Credit Facility for low-income countries is IMF’s main tool for medium-term support for countries facing protracted balance of payments problems, similar to Ghana’s.

She said the duration is typically between three to four years and may be extended to five years.

Ghana started bailout discussions with the IMF last month after the finance minister strongly rejected projections that the country would need support from the Fund.

Ghana is struggling to stabilise its debt stock, which has increased to 78.3% of gross domestic product at the end of June.

Five years ago, the debt-to-GDP was 62.5%. Akufo-Addo’s political opponents and some experts blame economic mismanagement for the current 78.3% debt-GDP figure.

S&P Global Ratings recently downgraded its assessment of Ghana’s ability to repay its debt to CCC+, seven levels below investment grade.

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Angry traders threaten to hit the streets over cedi's continuous fall to the dollar

Also, Moody’s Investors Service lowered Ghana’s long-term debt one step deeper into junk territory to Caa1 on February 4, 2022.

Fitch Ratings also cut Ghana’s rating a month earlier to B- from B.

U.S. Economist Steve Hanke Describes Ghana Cedi As Bank of Ghana Junk Currency

Meanwhile, YEN.com.gh reported previously that US-based Economist Professor Steve Hanke has given a grim assessment of Ghana's local currency, describing the cedi as a central bank "junk currency" as depreciation persists.

The popular economist said his calculations show that the the cedi has depreciated by approximately 34% against the US dollar since January 2020.

"In #Ghana, the economy is in the tank. By my calculations, the #cedi has depreciated by ~34% against the USD since Jan. 1, 2020. The cedi is a central bank junk currency. GHA must mothball its central bank and install a currency board," he tweeted over the weekend.

Source: YEN.com.gh