THE International Monetary Fund approved a three-year, $918 million extended credit facility for Ghana to help it repay debt and stabilize the nation’s economy.
The IMF Executive Board has allowed immediate disbursement of $114.8 million, the fund said in a statement Friday.
“The programme aims to restore debt sustainability and macroeconomic stability to foster a return to high growth and job creation, while protecting social spending,” the Washington-based IMF said in the statement.
Ghana turned to the IMF last year as its currency plunged and economic growth slowed because of a drop in commodity prices, including oil and gold. The government missed its budget deficit target, borrowing costs surged to a five-year high and credit-rating companies cut the nation’s creditworthiness.
The money will be used to increase foreign reserves to support the currency and curb the budget gap before a $1 billion Eurobond sale scheduled for June. The government is in talks with Bank of America Corp. to borrow as much as $1 billion to refinance domestic and international debt before the Eurobond sale.
Minister of Finance Seth Terkper raised the fiscal gap target to 7.5% of gross domestic product for 2015 because of the more than 50% decline in the price of oil. The previous estimate was 6.5%.
Inflation soared to 17% last year, curbing consumer demand and limiting economic growth already hampered by chronic power outages.
The economy will probably expand 3.9% this year from 4.5% last year. That’s the slowest pace in 20 years.
Ghana is the world’s second-largest producer of cocoa and Africa’s second-largest gold miner. Ivory Coast is the largest maker of the chocolate ingredient. South Africa is the continent’s biggest producer of bullion.
The cedi plunged to a record 3.88 last year against the dollar. The currency fell 0.2% to 3.835 per dollar Friday in Accra, the capital.