Ghana’s inflation rate is projected to reach 18% by the end of 2024, the International Monetary Fund (IMF) has revealed in its latest Country Report. This marks an upward revision from its earlier estimate of 15%, reflecting persistent price pressures caused by a weaker cedi and the ongoing dry spell.
The IMF noted that despite these challenges, Ghana’s macroeconomic outlook remains positive, buoyed by stronger-than-expected GDP growth in the second quarter of 2024. The Fund has consequently revised its 2024 growth projection upward to 4.0% from the earlier forecast of 3.1%, made during the second Economic Credit Facility (ECF) review.
“Continued tight monetary policy will bring inflation back to the Bank of Ghana’s target band (8±2 percent) by end-2025,” the IMF stated, underlining the importance of maintaining fiscal discipline to curb inflationary pressures.
The IMF’s analysis also highlighted ongoing fiscal consolidation efforts and the anticipated completion of Ghana’s debt restructuring as critical measures for ensuring public debt sustainability. It further projected that the country’s current account deficit would remain balanced until 2026, with international reserves expected to reach three months of import coverage.
Despite the improved outlook, the IMF cautioned that significant downside risks remain. Externally, heightened geopolitical tensions in regions such as Ukraine and the Middle East, coupled with commodity price volatility, could adversely affect Ghana’s economy. These factors may lead to higher imported inflation and increased investor risk aversion.
On the domestic front, the IMF warned of potential policy slippages ahead of the 2024 general elections or during the political transition period. Such setbacks, it said, could undermine macroeconomic stability, complicate debt restructuring discussions, and worsen domestic financing conditions.
“If protracted, weak cocoa harvests could affect exports and growth prospects. More generally, Ghana is subject to risks related to climate shocks,” the IMF added.
The Fund also expressed concerns that the disinflationary process is progressing at a slower pace than anticipated in the first half of 2024, while exchange rate volatility remains elevated.
Former Finance Minister Seth Terkper has weighed in on the IMF’s latest assessment, describing it as a positive signal for Ghana’s economy.
However, he emphasised that these improvements do not imply that all sectors of the economy are performing well.
Ghana’s inflation outlook remains central to its economic recovery strategy, with policymakers expected to maintain tight monetary policies to steer inflation back to target levels. As the year progresses, the government’s ability to navigate risks and implement prudent economic policies will determine the resilience of Ghana’s recovery.