The International Monetary Fund (IMF) has approved a $3bn, three-year extended credit facility for Ghana to help resolve its worst economic crisis in a generation. The deal has been approved by the IMF’s executive board following staff-level approval in December 2021. Although viewed as an important step, sources warn that the Ghanaian authorities will face long negotiations with creditors. The country is in discussions with both official sector and private creditors to restructure its debt. Roughly $5.4bn of debt to official creditors has been earmarked for restructuring, as well as $14.6bn of debt to private, overseas creditors.
Russia's economy shrank 1.9% YoY in Q1 2015, following growth of 3% in the same period last year. The economy defied expectations of a double-digit collapse in 2014, but still contracted 2.1% after the West imposed sanctions in response to Moscow despatching troops to Ukraine in February. Blunting the impact of sanctions are rising military production and huge state spending, allowing Moscow to plough on with what it calls its "special military operation" in Ukraine. The International Monetary Fund is among those that are forecasting growth in 2016, although it expects global isolation and lower energy revenues to dampen Russia's economic growth prospects for years to come.
President Joe Biden’s visit to Asia to reassure allies of the US focus on China’s aggressiveness in the region has backfired. The trip, which was originally intended to be a tour of three nations to highlight the US commitment to the Asia region, has been hugely diminished as Biden has cancelled stops in Papua New Guinea and Australia to focus on debt-limit talks with Republicans. Furthermore, there is speculation that if the US defaults on its debt, in conjunction with Biden’s decision to leave Asia early, this would undermine Biden’s message of strength and provide a potentially favourable contrast with China’s President Xi Jinping. Despite this, Biden still plans to attend a Group of 7 meeting in Japan where allies will confront what they call China’s economic pressure on less powerful countries. One foreign diplomat has claimed that skipping the G-7 would undermine a sense of unity towards China.
Jordan needs to hasten structural economic reforms to bolster growth beyond the current 2-3% average and to generate the jobs required to reduce unemployment, according to the International Monetary Fund (IMF), which added that high and increasing unemployment means 2.6% growth rate forecast for this year is insufficient to improve living standards. Some 22.9% of Jordanians are jobless, while the country has a population of almost 11 million and an annual population growth of about 2%. IMF official Ron Van Rooden said prudent monetary and fiscal policies have enabled Jordan to maintain macroeconomic stability.
Ghana's efforts to restructure its debt have been revealed as targeting $10.5bn of debt service relief from 2023 to 2026, with a view to achieving a return to a "moderate" risk of debt distress by 2028. The country has a $15bn financing gap in its balance of payments from 2023 to 2026, and had already completed a domestic debt exchange earlier this year. The International Monetary Fund board approved a $3bn, three-year rescue loan on Wednesday.
The International Monetary Fund (IMF) has granted a $3bn loan to Ghana following debt-restructuring agreements concluded between the country's creditors. Ghana owes around $4bn to lender nations including $1.5bn to China but its debt to commercial creditors is $14bn, featuring approximately $13bn owed to holders of its eurobonds. These liabilities are dwarfed by the $24bn in domestic debt, mainly owed to local banks and pension funds. The IMF's decision to progress with the bailout will be welcomed by countries trying to resolve debt difficulties whose challenges have been compounded by disagreement between western and Chinese creditors.
Ghana has signed a $3bn bailout programme with the International Monetary Fund following the country's most severe economic crisis in a generation, with goods' prices rising an average of 41% over the past year. While the loan is expected to address Ghana's balance of payments deficit, which concerns its failure to earn enough through exports, it is unlikely to solve the country's long-term economic problems or reduce poverty or increase salaries or job creation. The biggest challenge to implementing the IMF programme will be next year ahead of the polls, where governments have a history of excessive spending.
IMF: Ghana intends to agree debt rework MoU with official creditors before November
Reuters
23-05-18 15:59
Ghana has secured a $3bn, three-year rescue loan from the International Monetary Fund (IMF), which officials claim will help the African country to climb out of its “worst economic crisis in a generation”. Ghana’s Finance Minister Ken Ofori-Atta and IMF Mission Chief Stephane Roudet, have said the fund will be used “in managing our expenditure and increasing our revenue”. An agreement with official creditors is expected to be in place before the first IMF programme review, in November; this could trigger a payout of $600m.
John Dramani Mahama, a former Ghanaian President and member of the National Democratic Congress (NDC) party, has been endorsed by the party to lead it into the country's 2024 election, where he will seek his third attempt at the presidency. Commentators have declared that if NDC enters the election without being too fractious with itself, and with Mahama as their candidate, the 2024 contest could be tight. Mahama has pledged to put a standardised limit on borrowing and to cut down on the number of ministers and other government appointees.
Suriname has reached an initial agreement on the restructuring of its more than $600m debt with private creditors, following the revival of its $700m International Monetary Fund (IMF) programme. An agreement with the IMF on the second review of Suriname's loan programme means a $53m disbursement will become available once the fund's executive board provides approval. The original programme had been stagnant for more than a year due to missed fiscal targets. Suriname is also negotiating with creditors in China and India. The reviving of the IMF programme was a critical element in the restructuring of the country's debt.
Ghana bets on $3bn IMF loan to ‘reset’ economy, ease hardship
The Toronto Star
23-05-18 20:38
The International Monetary Fund's (IMF) $3bn bailout to Ghana has been described as a "crucial first step" in getting the West African nation on the road to economic recovery and inclusive growth. However, analysts warned the package, payable over three years in several tranches, needs to be complemented by further sustainable reforms and improved governance. The loan is aimed at restoring macroeconomic stability, ensuring sustainable growth and laying the foundations for stronger, more inclusive growth. Ghana has been reeling from an economic crisis caused by weak currency, rising public debt and high inflation.
Argentine President Alberto Fernandez has joined protesters in Buenos Aires to push back against the International Monetary Fund (IMF) amid brewing tensions with the lender. The South American producer, which has a rocky history with the IMF, has been hit by almost 109% inflation and dwindling dollar reserves. Argentina agreed to a $57bn programme with the Washington-based organisation in 2018 but the agreement failed and was replaced by a new $44bn deal last year. Buenos Aires wants faster payouts and easier economic targets and is calling for an investigation into the original deal after a new government auditor report found it had not passed through proper legislative channels.
The upcoming G7 meeting in Hiroshima, which aims to provide a “united front” on the Ukraine crisis and growing concerns about China’s global power, reflects a rapidly changing international order, according to the BBC. The summit of the world’s wealthiest democracies, which will start on Friday in the Japanese city, has also this year been extended to include Australia, India, Brazil, South Korea, Vietnam, Indonesia, Comoros (representing the African Union) and the Cook Islands (representing the Pacific Islands Forum). The new attendees represent the so-called “Global South”, which is keen to stress that there is an alternative to Russia and China. However, gaining support for sanctions to be placed against Moscow will be a challenge as many of the G7’s new guests maintain complex political and economic ties with both Russia and China. A number of the new attendees also depend heavily on Chinese aid and are economically tied to Beijing.
The leaders of the G7 met this past weekend in Hiroshima to discuss issues including climate change, amid global energy crises and Russia’s ongoing war with Ukraine. As we commented last week, Japan has been criticised for promoting dangerous fossil gas as part of the global energy transition, something the Biden administration is also being condemned for. Both nations are accused of making commitments to climate issues then backing out. Despite the relative success of the Kyoto Protocol in incentivising CO2 reductions when it was signed in 1997, targets have been revised upwards repeatedly since.
President Xi Jinping offered to help the five central Asian republics with their security and defense capabilities at the inaugural China-Central Asia Summit, held in the Chinese city of Xi’an. The summit was also used to discuss strengthening economic and energy ties with countries including Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. Increasingly powerful China is likely to become further involved in the quest for influence over the resource-rich republics, which all enjoyed a better trading relationship with China over Russia or the G7 bloc last year. Meanwhile, China is cementing its role as Russia's principal economic partner, enabling it to side-step Western sanctions relating to the crisis in Ukraine.
Bangladesh is under increasing pressure to meet targets set in its loan agreement with the International Monetary Fund (IMF), with review dates rapidly approaching. The South Asian nation is believed to have already missed the minimum foreign reserve criteria for March, set by the IMF when it approved a $4.7bn loan in January. An IMF staff mission visited the country in late April to early May, but has been unable to confirm that June targets will be achieved.
Greeks are set to go to the polls on Sunday 7 July to elect a new leader. The ruling party is the centre-right New Democracy, led by prime minister Kyriakos Mitsotakis, who is seeking a second term. The country is recovering from years of national debt and financial turmoil that left many households struggling, but Mitsotakis is credited with high growth, a drop in unemployment, and paying off debts to the International Monetary Fund. Nevertheless, securing a second term is by no means guaranteed, with opponents set to include opponents ranging from the far-right to the Communist Party.
Local governments in China are being urged to make it easier for private enterprises to operate by creating a “continuous and stable policy environment” for start-ups. In a note posted on WeChat, officials from Luoyang, in Henan province, argued that frequent and unpredictable policy changes could deter business people from investing. They called for law enforcement to adopt a “soft approach” and handle minor offences by first “convincing” rather than punishing offenders. The city’s economy is dominated by manufacturing and the petrochemical, aluminium and oil industries. China’s central government has recently emphasised the need for an upswing in private economic activity to counterbalance a sluggish economy and revive property markets. However, the latest official data showed that first quarter investment in the state sector grew by 10%, compared to private sector fixed-asset investment, which saw growth of just 0.6%.
The central bank Governor of Lebanon, Riad Salameh, has had a red notice issued for his arrest by Interpol after France put out an arrest warrant for him. The arrest warrant was issued as part of an investigation into whether Salameh embezzled hundreds of millions of dollars in public funds which he denies. Salameh is 72 years old and is part of the Lebanese political elite who are widely blamed for the economic crisis in the country. He has been targeted by a series of judicial investigations on charges such as fraud, money laundering and illicit enrichment. Salameh has repeatedly denied any wrongdoing and states that his wealth comes from his previous employment. Lebanon’s caretaker interior minister said on Friday that he would execute the red notice if the judiciary instructed him to do so.
Despite being forced to borrow 256 billion euros from the International Monetary Fund and its Eurozone partners to balance its budget, Greece managed to do so in four years despite a quarter of its GDP being lost to recession. Half a million workers and a quarter of a million small enterprises collapsed, and behemoths like Viohalko, the country’s largest industrial group, shifted its headquarters abroad. Despite political upheaval Greece has reached a surplus in the first quarter of 2023 and is expecting to outperform the EU average in its return to AAA investment grade status. Half of the Greek workforce is made up of small companies and self-employed individuals, and though the government has been attempting to encourage mergers and farming co-operatives through tax breaks, many small businesses continue to struggle with Greece’s high energy inflation and dire bureaucracy.
