- This financing will help Ghana build climate resilience and economic stability.
- The financing series will set the energy sector on a sounder financial and operational footing.
The World Bank has approved a $300 million Development Policy Operation for Ghana to help its economic recovery and support its resilient and inclusive growth. The Resilient Recovery Development Policy Operation is the first in a series of three operations of $300m each and part of a broad World Bank engagement for crisis response and climate resilience in Ghana. The approval of this financing package follows last week’s agreement in principle by the Official Creditors’ Committee under the G20 Common Framework on the key parameters of the proposed debt restructuring for Ghana.
Its objectives are to restore fiscal sustainability, support financial sector stability and private sector development, improve energy sector financial discipline and strengthen social and climate resilience. According to the World Bank, Ghana’s economy entered a full-blown macroeconomic crisis in 2022 due to pre-existing imbalances and external shocks. Large financing needs and tightening financing conditions exacerbated debt sustainability concerns, shutting Ghana off from the international market.
The disbursement of this $300m Development Policy Financing will play a vital role in easing Ghana’s fiscal constraints, sustaining the momentum of economic recovery while protecting the poor and vulnerable. A significant portion of Ghana’s population relies on agriculture for their livelihoods. As one of the countries susceptible to the impacts of climate change, which can affect crop yields, leading to food insecurity and economic challenges for farmers, this financing will help Ghana build climate resilience and economic stability.
Specific reforms supported by this financing series include strengthening domestic revenue mobilisation, controlling expenditures, safeguarding financial sector stability, removing barriers to private investment, setting the energy sector on a sounder financial and operational footing, strengthening the country’s social protection system, and mainstreaming climate mitigation and adaptation across policies.