The International Monetary Fund (IMF) bailout for Ghana is set to positively impact the financial market as the cedi is expected to record gains against the dollar and other major foreign currencies in the weeks ahead.
Reports earlier indicated that the first tranche of IMF cash to support the country’s balance of payment is expected to hit the Bank of Ghana’s account this week.
It has been suggested that the IMF Board will approve the “cash disbursement” as soon as it considers a request for Ghana’s programme this Wednesday, May 17, 2023.
Part of the first tranche is expected by Friday, March 19, 2023, while the remaining should be disbursed by June 2023.
According to the Bank of Ghana interbank exchange rate for March, the cedi’s performance since mid-March 2023 has been surprising, despite Ghana’s weak balance of payment position.
In the first two months of 2023, the cedi lost about 22.1% to the US dollar but has since March 2023 remained stable against the US dollar.
In the first week of May, the cedi benefited from the Bank of Ghana’s foreign exchange support, resulting in a 0.21 per cent week-on-week appreciation against the dollar.
It also climbed 0.77% against the euro but remained unchanged against the pound.
If the trend continues, the local currency will significantly reverse the losses experienced at the beginning of this year.
According to Bloomberg, the cedi strengthened by 5.3% on May 15, 2023, the most since April 3, 2023.
It actually gained 5.0 pesewas to the dollar on the retail market to sell at ¢11.90 on May 15, 2023.
The cedi managed to gain some stability following an announcement of debt relief by Ghana’s external creditors, which is crucial for the country to receive approval from the Board of the International Monetary Fund.
Details of disbursement
The transfers, reports indicate, would be done in two instalments, the first by Friday, May 19, 2023, or Monday, May 22, 2023.
Another disbursement is expected to be done in June 2023.
This will be followed by a visit by an IMF Mission to Ghana in June 2023 to review Ghana’s programme considerations.
Another review is expected just before the end of 2023, possibly in December 2023, before the final disbursement.
All the funds will be paid directly into the Bank of Ghana’s account to support Ghana’s balance of payments needs.
Ghana is expected to get about $3 billion spread over three years under the IMF programme.