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Ghana Gives In and Approaches the IMF

Ghana, one of West Africa’s largest economies, will hold formal talks with the International Monetary Fund (IMF) on a support package. Until now, Ghana, the continent’s second-biggest gold producer, had refused to seek IMF support to rescue an economy crippled by the pandemic, rampant inflation, and a depreciating currency, despite analysts warning it is close to a debt crisis. Hundreds took to the streets in Ghana’s capital Accra for two days this week to protest against spiralling inflation and other woes. Growth slowed to 3.3 percent year-on-year in the first quarter of 2022 and inflation hit a record of 27.6 percent in May. Ghana’s dollar-denominated sovereign bonds rallied sharply with issues up maturing in 2026 and 2027 jumping nearly five cents in the dollar to trade at their highest level since May. Central bank governor Ernest Addison said in May that Ghana faced an overall balance of payments deficit of $934.5m in the first quarter of 2022, compared with $429.9m in the same period last year. The central bank raised its main interest rate by 200 basis points to 19 percent last month, the second rise this year to buttress macroeconomic stability.