International donors have started to unlock frozen funding to Ghana in a sign of restored confidence following two tranches by the International Monetary Fund (IMF) under the country’s $918mn 3-year economic programme signed in April.
According to documents cited by Joy Business, the European Union (EU) has released about $180mn and the World Bank has disbursed $150mn so far this year. In addition, the African Development Bank (AfDB) is set to release around $50mn later this month. The country expects to get another $120mn from bilateral donors by the end of the year.
At the beginning of the year, donors withheld pledged budget support worth nearly $1bn for the coming 18 months due to governance concerns.
Donor funding is crucial for Ghana’s budget, which has been badly hit by the drop in commodity prices. The West African country is a major producer of oil, gold, and cocoa.
After a deepening macroeconomic instability, caused by the falling commodity prices, electricity constraints, and governance issues, Ghana reached an IMF-deal that should help restore macroeconomic stability and win back investor confidence. It has received a total of $233.1mn from the fund so far.
Ghana aims to cut its budget gap to 7.3% of GDP this year from 10.2% in 2014, but Finance Minister Seth Terkper warned last week that the recent steep drop in global oil prices could have negative implications for the full-year budget outcome.
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