The World Bank has approved $300 million U.S. dollars to support Ghana’s macroeconomic stability and to strengthen the country’s resilient economic recovery under its Development Policy Operation.
The approval of this financing package follows the government’s agreement in principle with the Official Creditors’ Committee under the G20 Common Framework on the key parameters of the proposed debt restructuring on Friday, January 12.
The global lender, in a statement dated January 23, noted that “the agreement, which is consistent with the Joint World Bank-International Monetary Fund Debt Sustainability Framework, represents a critical milestone towards restoring debt sustainability.”
World Bank Vice President for Western and Central Africa, Ousmane Diagana, stressed the measures Ghana is taking, including curbing inflation, to attract foreign direct investment, which measures the bank’s financing policy support.
“Restoring fiscal and debt sustainability, bolstering growth prospects, curbing inflation, and protecting the most vulnerable—measures supported by this financing—are urgent priorities for Ghana. They are also essential steps to allow the country to attract more foreign investment, revitalise its domestic private sector, build resilience against climate change, and improve the quality of life of its people,” said Ousmane Diagana.
Finance Minister Ken Ofori-Atta welcomed the development, pointing out that the funding would go a long way towards easing the country’s fiscal constraints.
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“The Government of Ghana remains committed to restoring macroeconomic stability and to the implementation of lasting reforms to set the economy on a path of strong long-term sustainable growth and transformation. The disbursement of this $300 million Development Policy Financing, the first in a series of three, will play a vital role in easing Ghana’s fiscal constraints, sustaining the momentum of economic recovery while protecting the poor and vulnerable,” he stated.
Objectives of the Resilient Development Policy
The Resilient Recovery Development Policy Operation is the first in a series of three operations of $300 million each and part of a broad World Bank engagement for crisis response and resilience in Ghana.
The financing policy aims to restore fiscal sustainability, support financial sector stability and private sector development, improve energy sector financial discipline, and strengthen social and climate resilience.
The policy entreats the government to undertake some specific reforms consistent with the financing series. They include strengthening domestic revenue mobilisation, controlling expenditures, safeguarding financial sector stability, and removing barriers to private investment.
In addition, the government is expected to set the energy sector on a sound financial and operational footing, strengthen the country’s social protection system, and promote climate adaptation and mitigation.