In brief
- Ghana commenced 2023 with cautious optimism for a credible fiscal path following the IMF Staff-Level Agreement (SLA) in December 2022 for a 3-year Fund-supported programme and ongoing debt restructuring negotiations as prior actions for the IMF Board approval.
- The authorities’ new timeline to secure the Board approval by end-May 2023 appears consistent with our longstanding expectation for Ghana to miss the March 2023 initial target date but secure the Board approval in 2Q2023. With positive indications about China’s commitment to restructure Ghana’s debt, we believe there is less cloud on the horizon for Ghana to secure the much-anticipated IMF Board approval in 2Q2023.
- Our views on the Treasury’s market update in April 2023
The IMF Board approval is possible in 2Q2023.
The ambitious fiscal adjustment hinges on a more credible public expenditure control to match revenue outturn, which we only see feasible under an IMF programme.
The modest medium-term target of 3-months import cover for gross FX reserves suggests the absence of Eurobond issuances under the IMF programme.
The World Bank’s USD 250.0mn pledge for the Ghana Financial Stability Fund is positive but the other funding sources remain doubtful.
- Our updated macroeconomic outlook for the rest of 2023
The Cedi will remain rangebound after the bear market rally in March 2023.
Inflation has turned the corner, with a stronger tailwind for disinflation expected in 2Q2023.
The growth prospects for 2023 remain dim, perhaps dimmer.
Yields will resume the downturn in late 2023 with the IMF programme as a catalyst.
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