IMF approves $3 billion credit loan to help stabilize Ghana's economy

May 18 (UPI) -- In a bid to "restore macroeconomic stability," the International Monetary Fund confirmed Thursday it is extending the government of Ghana approximately $3 billion worth of credit.

The IMF announced the loan Wednesday under a 36-month Extended Credit Facility to fund government programs in the West African country aimed at helping its economic recovery following the COVID-19 pandemic.

"The combination of large external shocks and pre-existing fiscal and debt vulnerabilities precipitated a deep economic and financial crisis in Ghana," IMF Managing Director Kristalina Georgieva said in a statement.

Ghana's fragile economy has been hit hard recently by external factors, most notably the COVID-19 pandemic which further shrunk its exposure to global markets, deepening its dependency on the IMF and curtailing its domestic financing ability.

An initial payment due shortly is worth approximately $600 million and will prop up the country's debt sustainability while laying the foundation for a more resilient economy. The government also plans massive overhauls of tax policy, revenue administration and public financial management.

"Preserving financial sector stability is critical for the success of the program," Georgieva said. "Given the adverse impact of the domestic debt restructuring on balance sheets of financial institutions, the authorities will devise and implement a comprehensive strategy to rapidly rebuild financial institutions' buffers and exit from temporary regulatory forbearance measures."

U.S. Vice President Kamala in March visited Ghana where she announced a multi-million-dollar aid package designed to promote and strengthen regional security.