Editorial: US$250m annual cap set on pre-CoD disbursements

Following an assessment from an International Monetary Fund (IMF) staff report that emerged after the second review of Ghana’s 36-month Extended Credit Facility Arrangement, government has set a new indicative target to limit total disbursements under pre-Cut-Off Date (CoD) facilities to US$250million annually over the period of 2024-2025.

This measure aims to keep disbursements within programme targets while addressing challenges posed by the significant volume of undisbursed funds from prior commitments.

According to the report, undisbursed amounts under external bilateral and commercial facilities and signed before the debt restructuring CoD were substantially larger than initially anticipated.

An estimated US$3.8billion in undisbursed funds from bilateral commitments alone has presented a considerable obstacle to achieving debt targets.

This vigilant oversight is crucial in ensuring that project disbursements align with programme parameters. Consequently, government is to evaluate the maturity and socio-economic value of each project, their expected pace of disbursement and the associated debt service profile.

Finance Minister Dr. Mohammed Amin Adam has umpteen times indicated the state’s commitment to maintaining debt sustainability and achieving macroeconomic objectives. “This new indicative target is a critical step in ensuring that our external project disbursements stay within the defined limits.”

To this end, a monthly intra-government monitoring mechanism will be established to ensure that disbursements remain aligned with the US$250million annual limit. Coordination with bilateral creditors will be a key aspect of this effort, as laid out in the Memorandum of Understanding (MoU) with the OCC.

After extensive negotiations, Ghana secured an agreement on the financial and non-financial terms of Eurobond treatment on June 19, 2024.

Thus, the decision by Ghanaian authorities along with the Official Creditors Committee (OCC) that the pace of project disbursements will be calibrated according to programme parameters is a most welcome development in achieving debt targets.

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