Ghana’s economic growth has shown remarkable resilience, exceeding initial expectations, according to the International Monetary Fund (IMF).
The IMF’s Executive Board recently completed the second review of Ghana’s $3 billion, 36-month Extended Credit Facility (ECF) Arrangement, first approved in May 2023.
This milestone allows for an immediate disbursement of SDR 269.1 million (approximately $360 million), bringing the total disbursements to about $1.6 billion under the arrangement.
The IMF highlighted that Ghana’s economic reform program is delivering on its objectives. Despite acute economic and financial pressures in 2022, the Fund-supported program has provided a credible framework for the government to adjust macroeconomic policies and implement crucial reforms.
These measures are aimed at restoring macroeconomic stability and debt sustainability while laying the foundation for higher and more inclusive growth. The positive outcomes of these efforts are clear: growth is more robust than initially projected, inflation is decreasing rapidly, and both fiscal and external positions are improving.
The IMF commended Ghana’s strong performance under the program, noting that all quantitative performance criteria for the second review and almost all indicative targets were met. Significant progress has also been made on key structural reforms, despite some delays.
In their comprehensive debt restructuring efforts, the Ghanaian authorities have made notable advancements. On June 11, 2024, an agreement was reached with Ghana’s Official Creditor Committee (OCC) under the G20’s Common Framework, formalizing a debt treatment agreement. This agreement provided the necessary financing assurances for the completion of the second ECF review. Additionally, an agreement in principle was reached with Eurobond holders on a restructuring plan, subject to confirmation of comparability of treatment by the OCC.
Ghana’s primary fiscal balance improved by over 4 percent of GDP last year. Looking ahead, the authorities are committed to further fiscal consolidation, aiming for primary fiscal surpluses of ½ percent of GDP this year and 1½ percent of GDP in 2025.
These efforts are supported by reforms to enhance revenue mobilization, streamline non-priority expenditures, and expand social protection programs to mitigate the impact of fiscal adjustments on vulnerable populations.
Measures are also being taken to strengthen tax administration, expenditure controls, arrears management, fiscal rules and institutions, and the management of state-owned enterprises (SOEs), particularly in the energy and cocoa sectors.
The Bank of Ghana (BoG) has maintained a prudent monetary policy stance to support rapid inflation reduction and has taken steps to rebuild international reserves.
The BoG has also strengthened measures to ensure financial sector stability, including the implementation of banks’ recapitalization plans. The Ministry of Finance has initiated the recapitalization of state-owned banks in line with available resources.
Ambitious structural reforms aimed at creating a more conducive environment for private sector investment and enhancing governance and transparency are gaining prominence. These reforms are crucial for boosting the economy’s potential and supporting sustainable job creation.
Sustaining macroeconomic policy adjustments and reforms is essential for fully restoring macroeconomic stability and debt sustainability, especially during the upcoming electoral period. These efforts are vital for fostering sustainable economic growth and reducing poverty.