Full Text: Ken Ofori-Atta's statement at joint press conference with IMF on Staff Level Agreement
Ladies and gentlemen of the media, thank you for honouring our invitation. The programme which started on 17th May 2023, was an approval of a 36-month IMF Programme under a $3 billion ECF. I would want to thank the Bank Staff for the quota approved for Ghana, relative to the quota of other countries, including Egypt and Tunisia.
We appreciate the extent to which the Fund staff worked to give us this very needed space, which ended up being frontloaded, such that by November, the Fund would have released $1.2 billion out of the $3 billion.
This all hinged on the fact that Cabinet moved the Ministry of Finance very quickly to prepare the PC-PEG document, which underpins our work with the Fund.
I am pleased to announce that the progress we sought to achieve is very much on course; the stability that the Ghanaian Economy was very much in need of has been achieved. We said we have 'Turned the Corner' and the major economic indicators such as inflation and exchange rate continues to drop and stabilise, and there is confidence returning in the economy.
I am happy to confirm that Ghana has completed its First Review of the IMF programme.
The First review had key deliverables including the 6 Quantitative Performance Criteria, the 3 Indicative Targets and 3 Structural Benchmarks that were due at the end of June 2023. 8. So while we await the Fund staff to present the full assessment of the targets, we are now in a very strong position to look into the future and give all stakeholders the confidence needed to support the country.
I will like to thank the almighty God for providing the needed guidance to both the Government of Ghana and Fund Staff to get us where we are today;
Let me also to thank HE the President for his continued leadership and direction throughout this period and HE the Vice President for his support.
Cabinet had to meet out of turn, and we had to have various EMT meetings, and these engagements have been very important and was a commitment to ensure that the President himself is driving it with the energy required in this circumstance.
And we can not take it for granted because we do have a clear view of what is happening in Chad, Zambia, Sri Lanka, Egypt, Tunisia, and we know that something different is happening here through the Leadership of our Economy.
Once again, let me express our appreciation to the IMF in general and in particular the IMF Managing Director, Kristalina, and management, Stephane Roudet, IMF Mission Chief to Ghana, and his team for their continued commitment to Ghana as we work to navigate out of our temporary crisis; and I also would like to thank all the Sector Ministers and Staff of Ministries, Departments, Agencies; CSO's; Financial Sector; and the Private Sector players whose consultations during this process succeeded in reaching this positive outcome.
And for me here, my linus blankets of Minister Amin, and Dep. Minister Abena and Dep. Minister John. It is beyond the work they do, and how they balance they being Parliamentarians. Sincere thanks for their support, sacrifice and hard work that is been shown at the Ministry.
Last but not the least I will like to express my sincere appreciation to the staff of the Ministry of Finance and the Bank of Ghana for their hard work and sacrifices which underpinned this Staff Level Agreement with Fund Staff today 6th October 2023.
A lot of hard work has gone on behind the scenes to reach yet another significant milestone today- a Staff Level Agreement (SLA) – the fastest in recent times of 5 months, as we steadily progress toward the approval of the first review of the Programme by the IMF Executive Board in November 2023.
Reaching an SLA in these times of continued global uncertainty is a remarkable achievement particularly when other countries have faced challenges in reaching SLA in these periods.
What occasioned the SLA was a strong performance of the Country in end-June 2023 performance indicators:
- 6 Quantitative Performance Criteria including on net international reserves, primary balance, ceiling on non-concessional borrowing, zero central bank financing and zero collateralised borrowing
- 3 Indicative Targets on non-oil public revenue, social protection spending and non-accumulation of payables (on net basis)
- 3 Structural Benchmarks on financial sector strengthening, arrears clearance and prevention strategy and updated energy sector recovery plan.
In addition to the 3 structural benchmarks, we also developed a turnaround strategy for COCOBOD to enhance the entity's financial viability and sustainability.
In addition, Ghana also showed strong performance in upcoming performance indicators due end-September 2023 these include the following structural benchmarks:
- A strategy for an indexation mechanism for the Livelihood Empowerment Against Poverty (LEAP) Benefits; to increase the beneficiaries to 2.5 million people and from 350,000 to 450,000 households in short order.
- A strategy on the review of Earmarked Funds;
- A Medium-Term Revenue Strategy- with an impressive performance of our non-oil revenue collections in the first half of the year. 21. In addition, Cabinet has approved an Affirmative Action Bill; and Social Protection Bill in line with our commitment to advancing the empowerment of women and to protect the poor and vulnerable in society.
It is important to note that the SLA is only one aspect of the approval process. We have a few milestones to cross to secure a Board approval between now and November. Notably the agreement on the MoU with the bilateral Official Creditor Committee (OCC).
We are optimistic that, once again, our bilateral creditors will deliver the MoU in time for our Board in November as we continue our engagements. Let me take this opportunity to say 'thank you' to the OCC for delivering the financing assurances that paved the way for Ghana's Programme approval in May 2023. We also look forward to engaging more with our Eurobond Holders and Commercial lenders and we hope to pursue this in our trip to Marrakesh for the World Bank Annual Meetings and hopefully by year end, we should be able to secure that.
Recent Economic Developments: Generally, the macroeconomic environment continues to show strong signs of stability and recovery as Government implements the IMF-supported PC-PEG. Based on available data from year-to-date:
- GDP Growth has rebounded strongly averaging 3.2% in first two quarters compared to 3.0% in same period in 2022 mainly on the back of growth in services (avg. 6.3%) and in Agriculture (avg. 6.2%). The average growth of 3.2 percent for 2023 Q1&Q2 is higher than the 2023 Revised growth target of 1.5 percent;
- Latest Price development in August 2023 indicated a fall in headline inflation, after consecutive upward trends since May 2023. Headline inflation dropped to 40.1 percent, from 43.1 percent in July and 42.5 percent in June 2023, respectively.
The decline was broad-based, with a stronger easing of food price pressures and the sustained easing of non-food price pressures observed in recent months.
- The Ghana cedi has remained stable from the beginning of the year to date depreciating cumulatively by about 23.5 percent year-to-date compared to a cumulative depreciation of 37.6 percent over the same period in 2022.
The cedi has been very stable, especially from February-to-date as the depreciation over that period was only 3.1 percent.
- On the Fiscal front, the primary balance on commitment basis for H1 2023 was a surplus of about GH¢2 billion compared to a target of a deficit of GH¢4 billion, driven in part by strong non-oil domestic revenues and rationalised spending.
Non-Oil Public Revenue for the period was GH¢50.1 billion compared to a programme target of GH¢49.8 billion. · The MPC maintained the Monetary Policy Rate at 30.0 percent at the 114th MPC meetings which ended on the 25th Sept 2023. Although inflation is expected gradually decline towards the target band over the medium-term barring unanticipated shocks, rising international crude oil prices and adjustments to utility tariffs remain a risk to the inflation outlook which would have to be managed through monetary policy vigilance; and
- Gross International Reserves (GIR) stood at US$2.1 billion equivalent to 1.0-month import cover, compared with US$1.5 billion (0.6 month of import cover) recorded at the end of December 2022. Gross reserves, broadly defined to include encumbered assets and petroleum funds, as at the end of August 2023, stood at US$5.1 billion.
On the debt restructuring front, we successfully concluded the remaining three crucial debt exchanges, marking the completion of the Comprehensive Ghana Domestic Debt Exchanges Programme. The three concluded debt exchanges included:
- the exchange of US$-denominated local bonds (US$ 742m, with a participation ratio of 91.7%), of the bills issued by the Cocobod (GHS 7.7bn, with a participation ratio of 97.4%), and of Pension Funds holdings of Treasury Bonds (GHS 29.6bn, with a participation ratio of 95.3%).
- I would like to thank Labour and the Trustees for a very cordial relationship to get to these achievements.
- Crucially, we settled GHs2.5bn to all new bondholders under the domestic debt restructuring on 22nd August 2023- the largest in the history of our economy. An additional GHs2bn was also paid to the Pension Trustees and GHs274mn on ESLA and Daakye on 5th September 2023.
- We've already paid almost half a billion dollars to IPPs and fuel suppliers as support from the Ministry of Finance to keep our lights on. Concluding Remarks: Notwithstanding uncertainties around global economic recovery, WE ARE CONFIDENT that we are on the right path, and therefore OPTIMISTIC about the future. Already, the economy is responding positively and strongly to the news of GoG and the IMF reaching an SLA for the 1st review and we are eager to leverage this momentum to the very moment when the IMF Executive Board approves the 1st Review in November.
We are also grateful to the IMF, the World Bank, the AfDB, other multilateral lenders, all our bilateral partners, and the Good people of Ghana for their support as we make STEADY and STRONG PROGRESS out of this temporary difficulty (through which many countries around the world are also working their way forward).
But a distinct part of Ghana's programme is whether we can continue as a nation to speak one language, for it is clear that when we work together, there is nothing that we imagine that is not possible.
This is a moment in our history where we must strive to do what is good for each other, and we are confident that we will get there. New things are being done, even in this difficult wilderness. We can see that our rains and rivers are doing well, and that the palms that we have will also thrive. WE ARE ALSO CONFIDENT that we will work this through together and as one people restore our macroeconomic stability and promote robust and inclusive growth.