Ghana on Tuesday agreed on a $3 billion credit deal with the International Monetary Fund (IMF) as part of the country's battle to end its worst economic crisis in decades.
The West African state is facing over 40% inflation, a risky debt burden and a sharp decline in its cedi currency since the start of the year.
The IMF said Ghana's government had committed to "a wide-ranging economic reform program" that will restore stability and debt sustainability.
"These are really grave times and in a really difficult economic environment," Finance Minister Kenneth Ofori-Atta told reporters in Accra.
"But this now today paves the way for the IMF management and executive board to approve Ghana's program request early, hopefully, next year."
The three-year IMF loan agreement has yet to be approved by the fund's board.
The program also aims to reduce inflation, strengthen the economy's resilience to external shocks and improve market confidence in the country, the IMF said.
A top cocoa and gold producer, Ghana also has oil and gas reserves, but its debt has soared, and like the rest of sub-Saharan Africa, it has been hit hard by fallout from the COVID-19 pandemic and the Ukraine war.
The crisis forced President Nana Akufo-Addo's government to reverse its position earlier this year and seek IMF help as economists warned of a default on debt payments.
The government has already announced a domestic debt swap as part of the program to ease a crunch in payments and is soon expected to release details about restructuring foreign debt.
IMF mission chief Stephane Roudet said IMF board approval for the deal would come after Ghana's creditors give assurances and the debt exchange program is shown to be sufficient.
"What is very important for the IMF is that the government strategy as a whole be sufficient to put debt on a sustainable path and to bring debt sustainability over the medium term," he said.
The government has already increased value-added tax (VAT) by 2.5% and frozen state-sector hiring to help trim spending and boost domestic revenues.
Officials say vulnerable groups will be protected, but critics are concerned the government program will lead to more austerity.
"Ghana having reached a staff-level deal with the IMF is quite good news, although we have yet to get the full details. But on the whole, it will facilitate the final approval," Ghanaian economist Daniel Anim Amarteye said.
"The government really needs the bailout to bring about macroeconomic stability and credibility."
Debt payments currently gobble up more than half of government revenues. A 50% slide in the cedi against the dollar has also increased Ghana's debt values by $6 billion this year.
Major credit rating agencies have downgraded their outlook on Ghana, reflecting market worries that the country risked missing debt payments.
The IMF negotiations came after a new tax on electronic transactions, known, as the E-levy, faced resistance and failed to generate expected revenue levels for the government.
