Minister of Finance Dr. Mohammed Amin Adam
The Minister of Finance, Dr Mohammed Amin Adamu, said government would soon have funds to resume stalled major projects across the country.
The funds will be provided as a result of the signing of a Memorandum of Understanding (MoU) with the country’s official creditors.
Dr. Amin Adamu said this at a press conference on Friday, May 24, explaining that the signing of the Memorandum of Understanding would mark the formal conclusion of negotiations between the country and its official creditors.
“We will immediately enter into bilateral agreements with each OCC member country as they are funding various projects in Ghana,” he said.
“This also means that disbursement money will start flowing towards these projects and contractors will be back on site to continue with their projects, some of which include major road projects,” he added.
The minister noted that the signing of the MoU will provide some relief to the country in terms of maturity extensions and pave the way for funds that would have been earmarked for debt repayment to be used to finance other development projects.
Speaking at the press conference, Dr Amin Adamu announced that Ghana received a draft Memorandum of Understanding from the Official Creditors Committee on Thursday, May 23, which it hopes to review and sign shortly.
The signing of the MoU is crucial for Ghana to receive its third loan of $360 million from the IMF, following a staff-level agreement reached with the IMF mission team in April this year.
This is part of the government’s efforts to restructure around $13 billion in external debt to meet debt sustainability criteria under the ongoing Extended Credit Facility (ECF) program.
The IMF Executive Board is expected to meet next month (June) to consider the second review and approve the third tranche to the country, paving the way for the disbursement of $360 million to the country.
The signing of the memorandum and payment of $360 million will be crucial in stabilizing the country’s currency (the cedi) against major trading partners, especially the dollar.
According to the World Economic Forum, foreign exchange reserves, which consist of cash and other assets, are important in maintaining the stability of a country’s currency. [the Cedi, in Ghana’s case] Provides liquidity during economic crises.
Professor Godfred Alpha Bokpin, an economist at the University of Ghana, said the country has not signed a memorandum of understanding with its creditors, creating a vacuum.
However, the finance professor said positive news about the IMF’s executive board approving a $360 million loan would inject some confidence into the economy as people would exchange dollars, leading to relative stability.
Meanwhile, at the Q2 CEO Breakfast held earlier this week, Deputy Minister of Finance, Dr. Stephen Amoah,
High customer numbers for tourism and hospitality centers across the country.
He said tourism and hospitality was among Ghana’s top four sectors for foreign exchange inflows and therefore the high customer base would help retain funds in the country and contain the depreciation of the cedi.
He therefore urged Ghanaians to take advantage of domestic tourism, saying, “Demonstrate high levels of utilization and keep your money domestic… If you stay here; [and] When the dollar people come, they will demand our currency.”