Ghana replaces finance minister who negotiated $3bn IMF bailout

Ghana has removed its finance minister who led IMF bailout talks and was in negotiations to restructure the country’s debts with commercial creditors.

Ken Ofori-Atta, who had been in office since 2017, was replaced on Wednesday as part of a cabinet reshuffle that analysts linked to elections at the end of the year.

The former investment banker is synonymous in Ghana with the $3bn deal struck with the IMF in December 2022 and the country’s decision the same month to default on its foreign debt.

Ofori-Atta has been leading efforts to clean up Ghana’s finances, including negotiating a domestic debt exchange scheme and the agreement reached last month with bilateral creditors, including the Paris Club of lenders and China, to restructure $5.4bn of external debt. The final plank of the debt restructuring was a reworking of $13bn in eurobonds owed to commercial creditors that Ofori-Atta had hoped to conclude by March.

The IMF last month disbursed the second tranche of $600mn to Ghana as it praised the progress made on its debt restructuring.

However Ofori-Atta had been the target of protesters who blamed him for what they saw as his inept handling of the economy. Analysts said his removal was an attempt by President Nana Akufo-Addo to draw a line under the debacle amid concerns that the economic turmoil would damage his party’s chances in the general election set for December.

Twelve other ministers and 10 deputy ministers were also relieved of their duties in the cabinet shake-up. The new appointments still need parliamentary approval.

Bright Simons, vice-president of think-tank Imani, said Ofori-Atta had been “aloof” about his party’s election chances and was “more concerned about redeeming his professional reputation after the country’s worst economic crisis in a generation happened on his watch”.

Vice-president Mahamudu Bawumia is the ruling party’s candidate in what is expected to be a tight contest against former president John Mahama of the main opposition. Akufo-Addo is ineligible after serving two terms as president.

Simons said the change of finance minister could signal the government’s plan to prioritise the election, with opinion polls showing Bawumia lagging behind Mahama.

“We expect more slippages in the [IMF] programme and a more lukewarm approach to the creditor negotiations as focus shifts to delivering the fiscal conditions the ruling party candidate needs to postpone austerity and ramp up his currently lacklustre electoral prospects,” he said.

Ofori-Atta has been replaced by Mohammed Amin Adam, the second-in-command at the finance ministry. Simons said Adam, a former deputy energy minister, was a “technically sound” successor.

“But it is widely suspected that he will be less insulated from ruling party pressure and will thus be less likely to hold the line in sustaining the IMF fiscal consolidation programme,” he said.

Data released this week showed an unexpected jump in inflation in January to 23.5 per cent, the first rise in six months. This has damped the prospect of further interest rate cuts after the central bank reduced rates last month.