IMF’s $380 Million for Ghana: What’s the Money Really For?

Some News outlets reported earlier this week that Ghana is likely to pass the IMF’s 5th programme review in December. Passing the IMF’s 5th programme means Ghana unlocks another $380 million disbursement. Disbursement for what? 

What is the IMF and What Does It Do?

Let’s go back a bit so you can understand what is happening right now. The first thing is, who is this IMF, and why are they giving us money? The International Monetary Fund, what we popularly call the IMF, is like a guardian that is there to ensure its people can live a good life even in difficult times. This is what we call economic and financial stability.

A country, naturally, is supposed to take care of its people. I mean, we pay taxes, so we deserve to have good roads, good healthcare, quality education and prices of goods and services we can afford. Unfortunately, the truth is our taxes are sometimes not able to pay for all these. So our next option is to borrow money. Now, what happens if we do not use that money wisely? Trouble. We won’t be able to provide the good life for our people any longer. We can’t keep prices stable, we can’t fund healthcare, education or good infrastructure, our currency loses its value, and on top of that, we can’t even pay back the money we borrowed. “Two troubles one God”

This is the kind of situation where the IMF steps in to help. How does it do this? It helps by doing two main things: giving you a loan and giving you advice to help the country recover. Sadly, it’s not free money, and so terms and conditions apply.

Why Did Ghana Go to the IMF?

Do you remember around 2022 when prices were jumping like crazy in the country? Yeah? That is when Ghana went to the IMF. Our economy was in deep trouble. Prices of goods were going up really fast, and the Cedi was losing value quickly, and we did not have enough money to fund a lot of things. That was the time when 1 dollar was almost 15 Cedis. On top of all these, the Government was struggling to pay the people we owe. “Man make hot, but the country also makes hot”. In short, we had run out of money to run the country smoothly.

During that time, Ghana paid a visit to the IMF, and they responded. They agreed to help us, but first things first. We have to sign a deal. Therefore, the government signed a deal where the IMF will loan us $3billion to sort ourselves out so the Government of Ghana can continue to provide the good life for its people. The $3 billion, however, wasn’t going to come at once. Eii, with our history? No. In addition, it wasn’t going into every Ghanaian’s pocket. The money is meant to, among all other things, stabilise the cedi, and to support essential spending like health and education. So, out of the $3 billion, they give you some to sort the country out in this area. Once we meet that target, we can go back for the next instalment (disbursement).

How Has the IMF Helped So Far?

Since Ghana signed the deal (joined the IMF programme), the country has already received several instalments (disbursements) after meeting earlier targets. These targets are like progress reports that the IMF uses to check whether Ghana is keeping its promises and is using the loan as per the terms and conditions. So far, with their help, inflation has started to fall, and the cedi is more stable than it was in 2022, although some challenges remain

What Does the $380 Million Disbursement Mean?

The 380 million is just another instalment (disbursement). If Ghana can meet another target, the IMF will release another $380 million, which is part of the total $3 billion package. Now we understand that the money will not come directly into our pockets. The one who receives this money is the Bank of Ghana. However, it means our current services will continue to run: Government will be able to pay salaries, fund education, fund healthcare, and pay some of the money we owe. In simple terms, it’s like repairing and rebuilding the house. It’s not really glamorous, but it’s necessary.