Official creditors MoU to unlock funds for halted projects, says Finance Minister

Mohammed Amin Adam has announced that Ghana received the draft MoU from its official creditors Committee and hoping to review and sign it soon

Mohammed Amin Adam, Minister of Finance, has said the government will soon get some funds to resume major halted projects across the country.

The funds will come as a result of the signing of a Memorandum of Understanding (MoU) with the country’s Official Creditors.

Amin Adam said this during a press briefing on Friday, 24 May, explaining that the signing of the MoU would signal an official end to the country’s negotiations with its official creditors.

“We will then immediately sign bilateral agreements with each of the OCC members because they have different projects which they are funding in Ghana,” he said.

“What it also means is that disbursements will start to flow in towards these projects and we should see the contractors going back to site to continue the projects – some include major road projects,” the minister added.

The minister noted that the signing of the MoU would also give some relief to the country in terms of the extension of the maturity, paving way for monies that would have been used to service the debt to go into financing of other development projects.

At the briefing, Dr Amin Adam announced that Ghana on Thursday, 23 May, received the draft MoU from its official creditors committee and hoping to review and sign it soon.

The signing of the MoU is critical for Ghana to get its third tranche of US$360 million from the International Monetary Fund (IMF), having reached a Staff Level Agreement with the Fund’s mission team in April this year. 

It forms of efforts by the government to restructure some US$13 billion external debt to meet debt sustainability parameters under the ongoing Extended Credit Facility (ECF) programme.

The IMF executive board is expected to meet next month (June) to consider the second review and approve the country’s third tranche, paving the way for the disbursement of US$360m to the country.

Signing the MoU, together with the disbursement of the US$360m, would be critical in stabilising the country’s currency (the Cedi) against its major trading partners, particularly, the dollar.

According to the World Economic Forum, foreign currency reserves, comprising cash and other assets are important in maintaining stability of domestic currencies [the Cedi, in Ghana’s case] and providing liquidity during the economic crisis.

Professor Godfred Alufar Bokpin, an economist, with the University of Ghana, said there was a vacuum because the country had not signed an MoU with its creditors.

However, the finance professor said, positive news with the IMF board approval of the US$360 million would engineer some confidence in the economy as people would trade their dollars, which would lead to some relative stability.

Meanwhile, speaking at the second quarter CEOs Breakfast Meeting earlier this week with players in the industry, Stephen Amoah, a deputy finance minister, advocated high patronage of domestic tourism and hospitality centres.

Tourism and hospitality is among Ghana’s top four sector contributors of foreign exchange inflows, as such, he said a high patronage would help in keeping money in the country to contain the depreciation of the Cedi.

He, therefore, encouraged Ghanaians to patronise domestic tourism, saying, “Let’s begin to show that high level of patronage and keep the money here… if you stay here, [and] the dollar people come, they will demand our currency.”

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