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The $300 million World Bank facility earmarked for supporting projects in 2024 has now been successfully transferred to the Bank of Ghana’s account.
Following Ghana’s fulfillment of all requisite conditions, including approval from the cabinet and Parliament, the funds have been officially transferred to Ghana.
According to sources, the transfer was completed this morning, March 27, 2024. The Bank of Ghana is now tasked with converting the funds into dollars and disbursing the equivalent cedi amounts to the respective government agencies and ministries responsible for overseeing the projects outlined in the 2024 Budget.
The “Foreign Exchange” component of this facility could go a long way to support the international reserves of the Bank of Ghana. Data released by the Bank of Ghana showed that its International Reserves have hit more than $6 billion ending February.
During a recent media engagement this week, Finance Minister Dr. Mohammed Amin Adam stated that the government anticipates receiving approximately $1.2 billion from the nation’s development partners by the year’s end.
Impact on the Economy
The disbursement will facilitate the acceleration of various infrastructure projects outlined in the 2023 budget, which had been stalled due to the delayed support from Ghana’s donors.
The World Bank was expected to disburse this facility late last year. However, delays in Ghana’s negotiations with its bilateral creditors impacted the approval process for this $300 million loan.
The Transfers of this loan facility which has hit the Bank of Ghana’s account will go a long way to improve the Bank of Ghana’s reserve, which could go a long way to help in slowing the rate of the cedi’s depreciation. This is because it could give some signal to the international market that, the Central Bank is now in a better position to support the local currency.
Focus of this facility
The disbursement of this $300 million Development Policy Financing, the first in a series of three, three operations of $300 million each and part of a broad World Bank engagement for crisis response and resilience in Ghana. Its objectives are to:
1) restore fiscal sustainability;
2) support financial sector stability and private sector development;
3) improve energy sector financial discipline; and
4) strengthen social and climate resilience.
It is expected to strengthen domestic revenue mobilization, controlling expenditures, safeguarding financial sector stability, removing barriers to private investment, setting the energy sector on a sounder financial and operational footing, strengthening the country’s social protection system, and mainstreaming climate adaptation and mitigation across policies.
Background
This disbursement is part of the total financial support from Ghana’s donor as part of the IMF programme that the country secured in May 2023. The IMF has advanced some $1.2 billion to Ghana under the FUND programme.
According to the World Bank, the First Resilient Recovery Development Policy Financing is a critical contribution by the Bank’s International Development Association, which will help Ghana’s economic recovery and support the country’s resilient and inclusive growth.
The World Bank in January 2024, approved this facility, after an agreement in principle by the Official Creditors’ Committee under the G20 Common Framework on the key parameters of the proposed debt restructuring for Ghana.
The agreement, which is consistent with the Joint World Bank-International Monetary Fund Debt Sustainability Framework, represents a critical milestone toward restoring debt sustainability.
