The former president of Ghana and flagbearer of the National Democratic Congress (NDC), John Dramani Mahama, in a recent interview with Reuters in Accra mentioned that he will renegotiate the terms of Ghana’s International Monetary Fund (IMF) bailout programme if elected in the upcoming December 7, 2024, general elections.

“I have been in an IMF programme before, when I was president, and I know that the IMF is not averse to sitting and talking and renegotiating issues," John Mahama said in a report by Reuters.

The statement by John Dramani Mahama has sparked conversations in the country on whether the terms of an IMF Extended Credit Facility (ECF) can be renegotiated after disbursements have been made.

This explainer would explore circumstances under which an ECF can be renegotiated, cite examples of countries that successfully renegotiated their deals with the IMF, and finally talk about if John Dramani Mahama can renegotiate Ghana’s deal with the IMF should he be elected as president of the country again.

Is it feasible to renegotiate an IMF deal?

The essence of an IMF bailout is to allow governments and countries to turn the economic fortunes of their countries for the better, as such IMF programs are made flexible to be reviewed, restructured, and renegotiated.

This is because the Fund acknowledges that changes in the political and economic atmosphere of a country can accelerate or impede the implementation of an agreement.

Key factors for which the IMF would allow for a review and renegotiation of an existing programme are; when there is a change in government, when a country is struck with a disaster that would make it impossible for it to continue with an IMF programme as agreed.

When Ranil Wickremesinghe took over as Sri Lanka's president in July 2022 after a popular uprising ousted his predecessor, Sri Lanka renegotiated its IMF program to address targets such as achieving a primary budget surplus and reducing external debt servicing.

The Democratic Republic of Congo (DRC) has seen renegotiations in its IMF-supported programs during periods of political transitions and economic reforms aimed at stabilizing the economy.

Additionally, in 2015, Greece renegotiated its deal with the IMF briefly after the Syriza party assumed leadership of the country.

In the case of Greece, the Syriza government renegotiated with both the IMF and its European creditors.

However, Ghana has on numerous occasions reviewed existing programmes with the IMF.

Is it possible for John Dramani Mahama to renegotiate Ghana’s existing ECF?

Like in the cases of Sri Lanka, the DRC, Greece, and many others, John Dramani Mahama can renegotiate Ghana’s existing IMF-ECF programme if elected into office.

The core responsibility would be for his government to prove and justify the need for the renegotiation and get the IMF and all relevant parties to agree.

EAN/MA