## 1ghaea2021001

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### Overview and Outlook
- External and domestic financing conditions tightened considerably at the start of the pandemic, but have improved since.
- Ghana returned to international capital markets with a US$3.025 billion Eurobond issuance in March 2021.
- Growth and inflation:
  - GDP growth: 6.5 (2019); 0.4 (2020); 4.7 (2021 proj.); 6.2 (2022 proj.).
  - Non-oil GDP: 5.8 (2019); 0.9 (2020); 6.4 (2021); 5.9 (2022).
  - Oil and gas GDP: 14.4 (2019); -4.6 (2020); -14.6 (2021); 10.3 (2022).
  - CPI inflation (annual): 7.1 (2019); 9.9 (2020); 8.9 (2021 proj.); 8.5 (2022 proj.).
- External balances and reserves:
  - Current account balance (percent of GDP): -2.7 (2019); -3.1 (2020); -2.2 (2021 proj.); -3.5 (2022 proj.).
  - Gross international reserves (US$ millions): 6,607 (2019); 6,962 (2020); 7,494 (2021 proj.); 7,435 (2022 proj.).
  - Reserves in months of prospective imports: 3.4 (2019); 3.2 (2020); 3.2 (2021 proj.); 3.0 (2022 proj.).
- Fiscal stance:
  - 2021 budget envisages fiscal deficit of 13.9 percent of GDP (cash basis, incl. energy and financial sector costs).
  - Central government budget (cash basis) revenue: 14.3 (2019); 12.9 (2020); 14.9 (2021); 15.0 (2022).
  - Expenditure: 21.8 (2019); 28.2 (2020); 28.9 (2021); 25.4 (2022).
- Public debt:
  - Public debt (gross): 62.9 (2019); 78.9 (2020); 83.5 (2021 proj.); 84.9 (2022 proj.).
- Outlook subject to significant uncertainty from new pandemic waves and financing/debt risks.

### Executive Board Assessment and Policy Priorities
- Directors’ appraisal:
  - Pandemic caused slower growth, higher food prices, and increased poverty.
  - Authorities commended for proactive COVID-19 response that mitigated the economic impact but contributed to record fiscal deficit and increased public debt vulnerabilities.
- Emphasized priorities:
  - Entrench prudent macroeconomic policies and ensure debt sustainability.
  - Press ahead with structural reforms for a sustainable, inclusive, and green recovery.
  - Protect the most vulnerable via more progressive revenue measures and faster return to pre-pandemic spending with a shift toward social, health, and development spending.
  - Timely completion of planned audit of COVID-19 emergency spending and new expenditure arrears.
  - Maintain broadly appropriate monetary policy stance; tighten if inflationary pressures materialize.
  - Guard against erosion of external buffers and remain committed to a flexible exchange rate regime.
  - Limit monetary financing of the deficit.
  - Continue supervisory and regulatory reforms to address banks’ growing holdings of sovereign debt and limit crowding out of private sector credit.
  - Continue capacity development in structural transformation and digitalization; complement with energy sector review and tourism diversification.
- Directors judged risks to Ghana’s capacity to repay have increased but remain manageable; Ghana’s capacity to repay the Fund remains adequate.

### Key Recent Economic Developments
- Pandemic and policy response:
  - Social distancing restrictions including partial lockdown in April 2020; recruited 37,000 health workers.
  - Health spending increased by about GHS 2 billion (0.5 percent of GDP).
  - Fiscal support amounted to GHS 6.8 billion (1.8 percent of GDP).
  - Launched four-year Ghana CARES program.
  - Bank of Ghana cuts: policy rate cut by 150bps in March 2020 and another 100bps in May 2021; reserve requirements lowered from 10 to 8 percent.
  - Central bank increased lending to government by 4.4 percent of GDP, including 2.6 percent of GDP under the Asset Purchase Program (APP).
  - Macro- and micro-prudential relaxations: capital conservation buffer halved to 1.5 percent, eased loan provisioning/classification rules, suspended bank dividend distributions, delayed new capital requirements for SDIs, promoted digital payments.
- Fiscal outcomes and public debt:
  - Budget deficit (cash basis, incl. energy and financial sector costs): -7.5 percent of GDP (2019) → -15.2 percent of GDP (2020).
  - Public sector debt: 63 percent of GDP (2019) → 79 percent of GDP (2020).
  - Additional arrears-financed spending of 2.1 percent of GDP incurred.
- Activity, prices, money and credit:
  - GDP growth series: 6.5 (2019); 0.4 (2020); 4.7 (2021 proj.); 6.2 (2022 proj.).
  - Inflation spiked to double digits in April 2020; fell to 7.5 percent (y-o-y) in May 2021; pressures could push inflation to 9.6 percent by end-2021 before returning to target next year.
  - Credit to private sector (annual % change): 4.7 (2019); 10.6 (2020); 8.6 (2021 proj.); 7.8 (2022 proj.).
  - Broad money (M2+) (annual % change): 21.6 (2019); 29.7 (2020); 22.1 (2021 proj.); 13.5 (2022 proj.).

### Fiscal and Debt Indicators (selected figures)
- Central government budget (cash basis) (percent of GDP):
  - Revenue: 14.3 (2019); 12.9 (2020); 14.9 (2021); 15.0 (2022).
  - Expenditure: 21.8 (2019); 28.2 (2020); 28.9 (2021); 25.4 (2022).
    - o/w financial and energy sector costs: 2.7 (2019); 4.7 (2020); 3.9 (2021); 1.0 (2022).
  - Overall balance: -7.5 (2019); -15.2 (2020); -13.9 (2021); -10.5 (2022).
    - excl. financial and energy sector costs: -4.7 (2019); -11.4 (2020); -10.0 (2021); -9.5 (2022).
  - Primary balance: -1.8 (2019); -8.8 (2020); -5.9 (2021); -1.4 (2022).
    - excl. financial and energy sector costs: 0.9 (2019); -4.1 (2020); -2.0 (2021); -0.3 (2022).
- Public debt (gross): 62.9 (2019); 78.9 (2020); 83.5 (2021); 84.9 (2022).
  - Domestic debt: 23.9 (2019); 34.2 (2020); 39.3 (2021); 40.1 (2022).
  - External debt: 39.0 (2019); 44.7 (2020); 44.2 (2021); 44.8 (2022).
- Memorandum:
  - Nominal GDP (GHS millions): 356,544 (2019); 383,486 (2020); 446,662 (2021); 510,652 (2022).
  - Government debt excl. ESLA (% GDP): 61.2 (2019); 76.9 (2020); 81.9 (2021); 83.5 (2022).

### Key Risks and Uncertainties
- Main risks:
  - New pandemic waves that could derail recovery.
  - Rising debt vulnerabilities and large financing needs increasing rollover and solvency risks.
  - Banks’ growing holdings of sovereign debt could crowd out private sector credit.
  - Possible inflationary pressures from higher fuel and import prices and budget revenue measures.
  - Ongoing fiscal rigidities and the need for credible medium-term consolidation to restore debt sustainability.
- DSA assessment:
  - Ghana remains at high risk of external and overall debt distress under the baseline.
  - Public debt assessed as sustainable only if credible and rigorous medium-term fiscal adjustment is implemented.
  - Gross financing needs: 25.6 percent of GDP (2020); projected 24.3 percent of GDP (2021).

### Policy Recommendations and Focus Areas (Article IV)
- Fiscal policy:
  - Implement more ambitious fiscal adjustment centered on progressive revenue measures, gradual return to pre-pandemic spending, and improved expenditure composition.
  - Anchor adjustment path on debt targets; accelerate consolidation beginning with Mid-Year Budget Review.
  - Revenue mobilization options: rationalize VAT and import duty exemptions; restore top income tax bracket; replace statutory CIT tax holidays with cost-based incentives; redesign alcohol and tobacco excise rates; increase telecommunication tax rate; launch property tax reform; strengthen tax administration and digitalization (ITAS).
- Social and spending priorities:
  - Protect vulnerable households; shift expenditure composition toward social, health, and development spending; scale up LEAP beneficiaries from 334,438 to 350,000; introduce CLASS to graduate LEAP beneficiaries.
  - Phase out untargeted COVID-19 support and reallocate to targeted social spending.
- Monetary policy and FX:
  - Avoid further monetary financing; tighten policy if inflation pressures increase.
  - Allow greater exchange rate flexibility; limit FX interventions to smoothing sharp fluctuations.
  - Expedite renewal of BOG-MOF MoU limiting monetary financing; appoint new BOG Board without delay.
- Financial sector:
  - Continue supervisory and regulatory reforms to limit risks from banks’ holdings of sovereign debt.
  - Contain new financial sector payments to limit budget costs; link new financial sector payments to claim recoveries; recapitalize NIB cautiously.
- Structural reforms and digitalization:
  - Prioritize digitalization to boost growth, formality, and tax revenue potential; Ghana CARES to focus on export-oriented industries with economies of scale.
  - Energy Sector Recovery Program (ESRP) review to clarify sector financial position and avoid further liabilities.
- Debt management and transparency:
  - Broaden public debt perimeter (include ESLA, GETFund/Daakye, Cocobod, IPP and gas-related liabilities, new domestic arrears once audited).
  - Improve public reporting of COVID-19 spending; complete external audit and rigorous audit of domestic arrears.

### Debt Sustainability, DSA Findings and Scenarios
- Public debt and composition (end-2020):
  - Public debt USD 52.5 billion — 78.9 percent of GDP.
  - External public debt USD 29.8 billion — 44.7 percent of GDP.
  - Domestic public debt USD 22.8 billion — 34.2 percent of GDP.
- DSA outcomes and risks:
  - PV of public debt: 75.3 percent of GDP (2020) — projected to remain above 55 percent benchmark through forecast horizon under baseline.
  - Gross financing needs: 25.6 percent of GDP (2020) — projected to remain above 14 percent benchmark.
  - Debt service (including amortization) to revenues: exceeded 129 percent in 2020; projected to peak at 155 percent in 2026.
- Alternative fiscal scenarios:
  - Ambitious consolidation scenario:
    - Additional revenue measures of 2.4 percent of GDP from 2021–2023; overall fiscal adjustment of 3.4 percent of GDP per year over the period.
    - Public debt would peak at about 85.7 percent of GDP in 2024 and then decline.
    - Annual gross financing needs remain around 20 percent of GDP.
  - Downside scenario:
    - Baseline revenue projections but planned spending cuts not implemented.
    - Public debt would reach 91 percent of GDP in 2025; gross financing needs rise to 26 percent of GDP.
    - Short-term higher growth but lower reserves, weaker exchange rate, higher borrowing costs, crowding out of private credit, inflation above target.
- Stress tests:
  - Modeled contingent liability shocks include 5 percent of GDP from further financial sector costs; 3 percent of GDP from non-guaranteed SOE debt; PPP shock with 35 percent of outstanding PPPs becoming public debt.
  - Tailored shocks include 30 percent one-off depreciation in 2022 and market financing shock with 400bps increase in borrowing cost for three years and shortening of external maturities by 2 years.

### COVID-19 Impact and Response (Annex II highlights)
- Health and vaccination:
  - As of June 7, 2021: Confirmed cases 94,444; Deaths 789.
  - Vaccine rollout: initial plan vaccinate 20 million by end-2021; announced US$200 million vaccination plan including US$51 million operational costs; COVAX procurement for 13 million people; private sector to finance another 6 million vaccines.
  - Mass vaccination started March 1, 2021; COVAX shipment of 600,000 Oxford/AstraZeneca doses.
- Fiscal support:
  - CAP in 2020: size 2.3 percent of GDP (health care 0.5 percent of GDP; economic support 1.8 percent of GDP).
  - CARES in 2021: expected cost about US$16 billion over 2020–2023 (26 percent of 2020 GDP financing needs GHS 100 billion over 2020–2023), with at least 70 percent expected to be covered by private sector.
- Social and business impacts (survey results March–June 2020):
  - 77 percent of households saw a decrease in income; 77 percent experienced higher food prices.
  - 52 percent of households reported lowering food consumption.
  - 3.9 percent of surveyed households had received direct government assistance between March and June 2020.
  - 270,000 SMEs benefited from subsidies, saving about 677,000 jobs.
- Targeting and coverage gaps:
  - 25 percent of localities reported no benefit from electricity support; 78 percent reported no benefit from water support.
  - Fewer than one in ten firms reported receiving government support by August/September 2020.

### Monetary Policy, FX, and Financial Sector Developments
- Monetary stance and risks:
  - Policy rate: 16.0 (end-2019); 14.5 (end-2020); BOG cut policy rate by 150bps in March 2020 and another 100bps in May 2021.
  - Exceptional BOG lending to government in 2020 totalled 4.4 percent of GDP (10-year APP bonds: 2.6; bond monetization: 1.5; securitized GOG overdraft: 0.6; securitized interest: 0.2; increase in GOG deposits at BOG: -0.6).
  - Monetary financing risks include potential inflation and exchange rate pressures and undermining BOG autonomy.
  - Staff view: monetary policy stance broadly appropriate provided fiscal consolidation proceeds; stand ready to tighten if inflationary pressures materialize.
- Financial sector cleanup and costs:
  - Financial sector bailout costs: GHS 22.7 billion by end-2020 (6.8 percent of GDP).
  - New operations expected in 2021, including additional payments and recapitalization of NIB.
  - Share of government lending to total bank assets: 44.7 percent (February 2021) from 36.3 percent a year before.
  - Capital adequacy well above minimum regulatory threshold of 11.5 percent.
- AML/CFT and digital payments:
  - Ghana exited FATF “grey list” in June 2021.
  - Digital measures: reduced mobile money fees, expanded digital government payments, pilot central bank digital currency, universal QR payment codes; Financial Sector Development and Inclusion Strategy target: reach 85 percent of population with access to formal financial services by 2023.

### External Sector Assessment and Policy Implications
- External position:
  - External position in 2020 stronger than implied by fundamentals, aided by gold exports, remittances, and import compression.
  - Capital and financial account surplus declined from 4.6 percent of GDP (2019) to 0.9 percent of GDP (2020) due to fall in FDI and portfolio flows.
  - FDI: 4.4 percent of GDP (2019) → 2.7 percent of GDP (2020).
- Reserve adequacy and FX:
  - Gross foreign assets/reserves: 3.2 months of next year’s imports (2021 proj.); 10 percent of GDP.
  - Gross reserves stabilized by US$3 billion Eurobond issue and US$1 billion RCF disbursement.
  - Reserves projected to decline over medium term, bottoming at 2.4 months of next year’s imports between 2025 and 2026.
- Policy recommendations:
  - Aggressive fiscal consolidation to contain rising interest costs and maintain market access.
  - Improve debt management and limit central bank FX intervention to smoothing.
  - Structural measures to improve investment climate and shift capital investment financing from debt to FDI.

### Capacity Development, Statistics, and Safeguards
- CD priorities:
  - Fiscal CD: improve domestic revenue mobilization; implement ITAS; strengthen cash management and governance around COVID-19 emergency funds.
  - Financial sector CD: risk-based supervision, liquidity management, stress testing.
  - Statistics CD: broaden debt coverage, next GDP rebasing, improve price statistics and PPI, improve trade and balance of payments data.
- Safeguards assessment (June 2021):
  - Mixed progress at BOG: strengthened external audits and IFRS transition; vulnerabilities remain including operation without a Board and limits on monetary financing.

*Source: IMF staff report content as provided in the supplied text.*

### 3.2 months of imports. External and domestic financing conditions tightened considerably at

### 1ghaea2021001 - 3.2 months of imports. External and domestic financing conditions tightened considerably at

### Overview and Outlook
- External and domestic financing conditions tightened considerably at the start of the pandemic, but have improved since.
- Ghana successfully returned to international capital markets for a US$3 billion Eurobond issuance in March 2021 (noted elsewhere as US$3.025 billion).
- Growth is expected to rebound to 4.7 percent in 2021, supported by a strong cocoa season and mining and services activity, and inflation remaining within the Bank of Ghana target.
- The current account deficit is projected to improve to 2.2 percent of GDP.
- Gross international reserves are expected to remain stable.
- The 2021 budget envisages a fiscal deficit of 13.9 percent of GDP in 2021, including energy and financial sector costs, and a gradual medium-term fiscal adjustment which would support a decline in public debt starting in 2024.
- The outlook is subject to significant uncertainty, including from new pandemic waves and risks associated with large financing needs and increasing public debt.

### Executive Board Assessment and Policy Priorities
- Directors noted the pandemic had a severe impact: slower growth, higher food prices, and increased poverty.
- Directors commended authorities for proactive COVID-19 response that mitigated economic impact but contributed to a record fiscal deficit and increased public debt vulnerabilities.
- Key emphasized priorities:
  - Entrench prudent macroeconomic policies and ensure debt sustainability.
  - Press ahead with structural reforms to deliver a sustainable, inclusive, and green recovery.
  - Protect the most vulnerable through more progressive revenue measures and faster return to pre-pandemic spending levels with a shift toward social, health, and development spending.
  - Timely completion of the planned audit of COVID-19 emergency spending and new expenditure arrears.
  - Maintain broadly appropriate monetary policy stance; tighten policy if inflationary pressures materialize.
  - Guard against erosion of external buffers and remain committed to a flexible exchange rate regime.
  - Limit monetary financing of the deficit.
  - Continue supervisory and regulatory reforms to address banks’ growing holdings of sovereign debt and limit crowding out of private sector credit.
  - Continue capacity development in structural transformation and digitalization agendas; complement with energy sector review and tourism diversification.
- Directors judged that risks to Ghana’s capacity to repay have increased but remain manageable; Ghana’s capacity to repay the Fund remains adequate.

### Key Recent Economic Developments
- Pandemic and policy response:
  - Government implemented social distancing restrictions including partial lockdown in April 2020; school and border closures; recruited 37,000 health workers; income tax waiver and life insurance for government health personnel.
  - Health spending increased by about GHS 2 billion (0.5 percent of GDP).
  - Fiscal support amounted to GHS 6.8 billion (1.8 percent of GDP).
  - Launched the four-year Ghana CARES program.
  - Bank of Ghana cut policy rate by 150bps in March 2020 and another 100bps in May 2021; lowered reserve requirements from 10 to 8 percent.
  - Central bank increased lending to government by 4.4 percent of GDP, including 2.6 percent of GDP under the Asset Purchase Program (APP).
  - Macro- and micro-prudential relaxations included halving the capital conservation buffer to 1.5 percent, easing loan provisioning/classification rules, suspending bank dividend distributions, delaying new capital requirements for SDIs, and promoting digital payments.
- Fiscal outcomes and public debt:
  - Budget deficit (cash basis, incl. energy and financial sector costs) rose from 7.5 percent in 2019 to 15.2 percent of GDP in 2020.
  - Public sector debt rose from 63 percent of GDP to 79 percent of GDP in 2020.
  - Additional arrears-financed spending of 2.1 percent of GDP was incurred.
- Economic activity and prices:
  - GDP growth: 6.5 percent (2019); 0.4 percent (2020); projected 4.7 percent (2021); projected 6.2 percent (2022).
    - Non-oil GDP: 5.8 (2019); 0.9 (2020); 6.4 (2021); 5.9 (2022).
    - Oil and gas GDP: 14.4 (2019); -4.6 (2020); -14.6 (2021); 10.3 (2022).
  - Inflation (CPI, p.a.): 7.1 (2019); 9.9 (2020); 8.9 (2021); 8.5 (2022).
  - Inflation spiked to double digits in April 2020; fell to 7.5 percent (y-o-y) in May 2021; pressures could push inflation to 9.6 percent by end-2021 before returning to target next year.
- External sector and reserves:
  - Current account balance (percent of GDP): -2.7 (2019); -3.1 (2020); -2.2 (2021); -3.5 (2022).
  - Gross international reserves (US$ millions): 6,607 (2019); 6,962 (2020); 7,494 (2021); 7,435 (2022).
    - in months of prospective imports: 3.4 (2019); 3.2 (2020); 3.2 (2021); 3.0 (2022).
  - Net international reserves (US$ millions): 5,247 (2019); 4,559 (2020); 5,212 (2021); 5,285 (2022).
    - in months of prospective imports: 2.7 (2019); 2.1 (2020); 2.2 (2021); 2.1 (2022).
  - External financing conditions tightened early in the pandemic; Eurobond spreads stabilized and Ghana returned to markets in March 2021 with a US$3.025 billion Eurobond at higher interest rates and shorter maturities than before.
- Money and credit:
  - Credit to the private sector (annual percentage change): 4.7 (2019); 10.6 (2020); 8.6 (2021); 7.8 (2022).
  - Broad money (M2+) (annual percentage change): 21.6 (2019); 29.7 (2020); 22.1 (2021); 13.5 (2022).

### Fiscal and Debt Indicators (selected figures)
- Central government budget (cash basis) (percent of GDP):
  - Revenue: 14.3 (2019); 12.9 (2020); 14.9 (2021); 15.0 (2022).
  - Expenditure: 21.8 (2019); 28.2 (2020); 28.9 (2021); 25.4 (2022).
    - o/w financial and energy sector costs: 2.7 (2019); 4.7 (2020); 3.9 (2021); 1.0 (2022).
  - Overall balance: -7.5 (2019); -15.2 (2020); -13.9 (2021); -10.5 (2022).
    - excl. financial and energy sector costs: -4.7 (2019); -11.4 (2020); -10.0 (2021); -9.5 (2022).
  - Primary balance: -1.8 (2019); -8.8 (2020); -5.9 (2021); -1.4 (2022).
    - excl. financial and energy sector costs: 0.9 (2019); -4.1 (2020); -2.0 (2021); -0.3 (2022).
- Public debt (gross): 62.9 (2019); 78.9 (2020); 83.5 (2021); 84.9 (2022).
  - Domestic debt: 23.9 (2019); 34.2 (2020); 39.3 (2021); 40.1 (2022).
  - External debt: 39.0 (2019); 44.7 (2020); 44.2 (2021); 44.8 (2022).
- Memorandum:
  - Nominal GDP (GHS millions): 356,544 (2019); 383,486 (2020); 446,662 (2021); 510,652 (2022).
  - Government debt excl. ESLA (% GDP): 61.2 (2019); 76.9 (2020); 81.9 (2021); 83.5 (2022).

### Key Risks and Uncertainties
- New pandemic waves that could derail recovery.
- Rising debt vulnerabilities and large financing needs that increase rollover and solvency risks.
- Banks’ growing holdings of sovereign debt could crowd out private sector credit.
- Possible inflationary pressures from higher fuel and import prices and budget revenue measures.
- Ongoing fiscal rigidities and the need for credible medium-term consolidation to restore debt sustainability.

### Policy Recommendations and Focus Areas from the Article IV Consultation
- Growth and digitalization:
  - Prioritize the digitalization agenda to boost growth, formality, and tax revenue potential.
  - CARES recovery program should prioritize sectors with potential to innovate, achieve economies of scale and create jobs.
- Fiscal policy:
  - Implement a more ambitious fiscal adjustment centered on progressive revenue measures, a gradual return to pre-pandemic spending levels, and improved expenditure composition.
  - Anchor adjustment path on debt targets to reduce debt sustainability risks.
- Monetary policy:
  - Avoid further monetary financing; tighten policy if inflation pressures increase.
  - Allow greater exchange rate flexibility to protect reserves and reduce FX borrowing needs.
- Structural and sectoral reforms:
  - Energy Sector Recovery Program (ESRP) review to clarify the sector’s financial position and avoid further liabilities.
  - Contain new financial sector payments to limit budget costs.
  - Continue structural transformation, tourism diversification, and digital transition to reduce corruption, boost tax revenues, and improve service delivery.
- Financial sector:
  - Continue supervisory and regulatory reforms to limit risks from banks’ holdings of sovereign debt.
  - Maintain steps that improved AML/CFT framework (noted improvement that allowed Ghana to exit the FATF “grey list”).

*GHANA: STAFF REPORT FOR THE 2021 ARTICLE IV CONSULTATION*

### 2.2 percent of GDP in 2021 as the pickup in oil prices offsets a gradual resumption in imports.

### 1ghaea2021001 - 2.2 percent of GDP in 2021 as the pickup in oil prices offsets a gradual resumption in imports.

### Recent economic developments and external sector
- The cedi depreciated 3.9 percent against the US dollar in 2020, less than in 2019, due to lower FX demand, structural reforms (including higher use of forward FX auctions), and BOG intervention. It remained stable in the first half of 2021, as portfolio inflows resumed.
- Gross international reserves:
  - rose from US$6.6 billion in 2019 to US$7 billion in 2020,
  - are expected to reach US$7.5 billion (3.2 months of imports) by end-year.
- The current account:
  - benefited from lower imports due to the pandemic, stable remittances, and a weak correlation between the main export prices (gold, oil, cocoa).
- Gross reserves reached 4 months of prospective imports after the March 2021 Eurobond issuance.

### Impact of COVID-19 and recovery dynamics
- Public health and mobility measures:
  - The government implemented social distancing restrictions, including a partial lockdown in April 2020, leading to widespread temporary business closures and income loss.
  - Mobility bounced back strongly in H2 2020 as restrictions were eased, and picked up further in recent months, matched by rising business and consumer confidence.
- Sectoral effects:
  - Economic activity declined substantially in Q2 2020, but rebounded as COVID-19 restrictions were eased.
  - The recovery has been uneven across sectors; education, retail and hospitality face a slower recovery, with tourism and business travel likely to suffer multi-year reductions in demand.
  - Food prices spiked after the April 2020 lockdown but have moderated since then.
- Vaccination and outlook:
  - Recovery supported by an effective vaccine rollout that is a leader in the region, although constrained by available supply.

### Outlook and baseline projections
- Baseline scenario assumptions:
  - V-shaped economic recovery, gradual fiscal consolidation, and an exit from monetary easing.
  - Expansion of extractive industries—including a gradual start of oil production in the Pecan field from 2024 onwards—supported by the CARES program and wide-ranging digitalization reforms.
  - Continued access to international markets and no further recourse to central bank financing.
- Growth and fiscal projections:
  - Annual growth would average 5.2 percent over the medium term.
  - Authorities would pursue fiscal consolidation in the 2021 budget, implying a 9 percent of GDP primary balance adjustment based on revenue measures in 2021 and expenditure cuts in 2022-24, resulting in a primary surplus by 2024.
  - Public debt would peak at 87.4 percent of GDP in 2024, and gross financing needs would average 22 percent of GDP.
  - Inflation assumed to remain close to target while gross reserves would gradually decline below three months of imports coverage.
- Key macroeconomic indicators (selected entries from table):
  - GDP at constant prices: 2019 Act. 6.5, 2020 Prel. 0.4, 2021 Proj. 4.7, 2022 Proj. 6.2, 2023 Proj. 4.7, 2024 Proj. 5.0, 2025 Proj. 5.8
  - Consumer price index (annual average): 2019 7.1, 2020 9.9, 2021 8.9, 2022 8.5, 2023 8.0, 2024 6.9, 2025 6.1
  - Overall fiscal balance (in percent of GDP)1/: 2019 -7.5, 2020 -15.2, 2021 -13.9, 2022 -10.5, 2023 -9.5, 2024 -9.3, 2025 -8.1
  - Central government debt (gross, in percent of GDP): 2019 62.9, 2020 78.9, 2021 83.5, 2022 84.9, 2023 86.4, 2024 87.4, 2025 87.0
  - Current account balance (in percent of GDP): 2019 -2.7, 2020 -3.1, 2021 -2.2, 2022 -3.5, 2023 -4.5, 2024 -4.8, 2025 -4.1
  - Gross international reserves (millions of US$): 2019 6,607; 2020 6,962; 2021 7,494; 2022 7,435; 2023 6,886; 2024 6,971; 2025 7,052
  - in months of prospective imports of goods and services: 2019 3.4, 2020 3.2, 2021 3.2, 2022 3.0, 2023 2.6, 2024 2.6, 2025 2.4
- Footnote:
  - 1/ Cash basis, excluding domestic arrears of 2.1 percent of GDP in 2020.

### Risks and uncertainty
- Main downside risks:
  - Pandemic evolution: new COVID-19 waves, including from more transmissible variants, could trigger additional restrictions, slow activity, increase spending needs, delay fiscal consolidation, and exacerbate debt vulnerabilities.
  - Debt rollover difficulties: slow fiscal adjustment or tighter global financing conditions could undermine investor confidence, cause portfolio outflows, higher sovereign yields, affect banks’ balance sheets, and domestic market capacity to absorb new government debt may not fully materialize.
  - Materialization of contingent liabilities: energy and financial sector cleanup costs added 7 percent of GDP to public debt over the past three years; higher-than-expected costs, or SOE liabilities, could further worsen the debt outlook.
  - Climate change: extreme weather could reduce growth and exacerbate inequality, affect cocoa production, hydropower generation, and shared water resources in the Volta basin.
- Upside possibilities:
  - Structural transformation and new oil or mining discoveries could boost medium-term growth and tax revenues, support job creation, reduce poverty, and diversify the economy to mitigate commodity shocks.
- Alternative fiscal scenarios:
  - Ambitious consolidation scenario:
    - Additional revenue measures of 2.4 percent of GDP from 2021 to 2023 over the baseline, for an overall fiscal adjustment of 3.4 percent of GDP per year over the period.
    - Public debt would peak at about 85.7 percent of GDP in 2024 and then decline decisively.
    - Annual gross financing needs would remain around 20 percent of GDP.
    - Short-term negative effect on growth but would decrease bond spreads and government borrowing costs; current account would improve through lower import demand.
  - Downside scenario:
    - Baseline revenue projections but planned spending cuts not implemented.
    - Public debt would reach 91 percent of GDP in 2025, with gross financing needs rising to 26 percent of GDP.
    - Expansionary fiscal stance would push growth temporarily above the baseline but lower reserves, weaken the exchange rate, increase borrowing costs, crowd out private-sector credit, and keep inflation above target.

### Capacity to repay the Fund and external vulnerabilities
- Outstanding Fund credit:
  - Following the April 2020 RCF disbursement, total outstanding credit from the Fund reached SDR 1.459 billion (197.8 percent of quota and 30.1 percent of gross international reserves) at end-2020.
- Repayment projections:
  - Repayments to the Fund are projected to rise over the medium-term, peaking at SDR 239.1 million in 2026.
  - Under the baseline, repayments would remain below 1.1 percent of exports, 4.6 percent of gross international reserves and 5.9 percent of external debt service.
  - In the downside scenario, scheduled repayments would peak in 2026 at 1.1 percent of exports, 5.1 percent of reserves and 6.1 percent of external debt service.
- Assessment:
  - Ghana’s capacity to repay is assessed as adequate under the baseline.
  - Large external financing needs leave Ghana exposed to sudden changes in global liquidity conditions or loss of confidence.
  - Public finances are a source of vulnerabilities: rapidly increasing public debt, large gross financing needs, and rising reliance on commercial debt contributing to a growing debt service burden.
  - Financial sector considerations: recent cleanup strengthened financial sector stability, but banks’ large exposure to government bonds creates risks.
  - Possible mitigating factors: Ghana’s strong track record of servicing Fund debts, expected recovery, commitment to fiscal discipline, potential for exchange rate to act as shock absorber, and a possible SDR allocation could strengthen reserves.

### Policy discussions and recommendations
- Policy focus areas:
  - Supporting the economic recovery given limited fiscal space.
  - Need for faster fiscal adjustment to lower debt sustainability risks, while protecting vulnerable households.
  - Steps to manage growing fiscal risks in state-owned enterprises, especially in the energy sector.
  - Importance of a prudent monetary policy stance and avoiding fiscal dominance.
  - Reforms to preserve financial stability and address banks’ growing exposure to the sovereign.
- Supporting the recovery (selected measures):
  - Ghana CARES program:
    - Seeks to invest across agribusiness (including food import substitution), manufacturing (textiles, pharmaceuticals, automotive), heavy industry and petrochemicals, and to create a technology ecosystem and financial services hub.
    - Overall financing needs are GHS 100 billion over 2020–2023 (26 percent of 2020 GDP), with at least 70 percent expected to be covered by the private sector.
    - Given limited fiscal space, initial implementation likely to focus on a few export-oriented industries.
  - Infrastructure agenda:
    - Encompasses roads, rail, water, electrification, hospitals and housing.
    - Supported by US$3 billion in PPP investments, increasing FDI, venture capital financing, and strategic partnerships with donors and other partners.
    - Establishment of a new development bank to boost access to long-term credit, with support from the World Bank, KfW and the European Investment Bank.
  - Social protection:
    - Scale up LEAP beneficiaries from 334,438 to 350,000 in the year.
    - Introduction of Complementary Livelihood and Asset Support Scheme (CLASS) to graduate LEAP beneficiaries and assist those starting or expanding microenterprises.
    - COVID-19 training and retraining programs targeting those who lost jobs, particularly in education and hospitality.
- Digitalization and growth-enhancing reforms:
  - Digital transition potential:
    - Mobile money has overtaken other retail payment instruments; mobile data usage is now over one-third of the OECD per capita average.
    - Digital initiatives include National Digital Property Addressing System (Ghana PostGPS) targeting 7.5 million properties; paperless port system; biometric national ID cards (16 million registered); Universal QR code payments (GhQR); government e-services and a digital 2021 Census.
    - BOG FinTech and Innovation office established in May 2020 to manage and supervise the FinTech industry.
    - Digitalization could increase economic growth; research suggests expanding internet access in sub-Saharan Africa by an extra 10 percent of the population could raise real per capita GDP growth by 1 to 4 percent.
  - Constraints:
    - Growth potential from digitalization also requires adequate investment in electrification (16 percent of the population still lack access to electricity) and transport networks, especially in rural areas.
- Governance and anti-corruption:
  - Ghana has a strong legal and institutional framework to combat corruption, but effectiveness could be improved by addressing governance issues highlighted in the Corruption Risk Assessment and better coordinating agencies.
  - Authorities commit to increased budget allocations to institutions mandated to deal with corruption.

### Authorities’ views
- Authorities broadly agreed with the outlook and risks, stressing the need to balance fiscal consolidation with growth-enhancing expenditures to support recovery and mitigate COVID-19 impacts.
- They view the Ghana CARES program as the propelling anchor for broad-based, inclusive and sustainable recovery, and are confident in structural transformation and digitalization to accelerate growth, create jobs, reduce corruption and boost tax revenues.
- Authorities expressed confidence in their ability to meet debt obligations, highlighted strong track record with official and commercial creditors, commitment to macroeconomic stability, and considered the Fund a trusted advisor and development partner; they noted sovereign ratings remain stable and Eurobond spreads reverted to pre-pandemic levels.

*Source: IMF staff report content as provided in the supplied text.*

### 26.      The pandemic shock contributed

### 26.      The pandemic shock contributed

### Fiscal impact of the pandemic (2020 outcome)
- Overall fiscal deficit: 15.2 percent of GDP.
- Deviation from staff’s pre-COVID 2020 projection: 8.8 percent of GDP.
- Revenue shortfall: 3.1 percent of GDP, driven by the growth slowdown.
- Expenditure increase: 5.7 percent of GDP, comprising:
  - Direct and indirect COVID-19 response spending: 2.3 percent of GDP.
  - Additional energy and financial sector costs: 2.3 percent of GDP.
  - Higher interest payments: 0.8 percent of GDP.
- Additional arrears-financed spending: 2.1 percent of GDP (domestic arrears yet to be audited but scheduled to be paid in coming years).
- Fiscal deficit on commitment basis (inclusive of arrears-financed spending): 17.4 percent of GDP.

### 2021 budget: measures and projected outcome
- New revenue measures yielding: 1.4 percent of GDP (including VAT and NHIS rate hikes, higher fuel excises, a new bank profit levy, and more effective tax administration through large taxpayer audits and special courts).
- Reduction in COVID-related spending compared to 2020: 1.3 percent of GDP.
- Domestic arrears clearance included in 2021 budget: 0.9 percent of GDP.
- Staff projects lower yield from tax administration measures than the budget law by 0.5 percentage point of GDP.
- Staff-projected budget deficit for 2021 (including energy and financial sector costs): 13.9 percent of GDP.
- Ghana. 2021 Budget Revenue Measures (GHc million) — figures shown in source for individual measures (total revenue measures: 6,098 and 4,098 in two columns; memo: Revenue measures in percent of GDP: 1.4 and 0.9).

### Medium-term consolidation and projections
- Medium-term plan assumes no new revenue measures after 2021 and relies on spending cuts (nominal salary reductions, no growth in civil service workforce, lower intragovernmental grants and capital expenditures).
- Budget targets a return to a positive primary balance (excluding energy and financial sector costs) by 2022 (in line with the now-suspended Fiscal Responsibility Act).
- Staff projects a primary surplus (including energy and financial sector costs) starting in 2024.
- Staff recommends accelerating consolidation to reduce solvency and rollover risks with an earlier and more aggressive tightening (beginning with the Mid-Year Budget Review).
- Consolidation strategy should emphasize burden sharing and could be anchored on debt targets (possibly formalized in a revised Fiscal Responsibility Act).

### Revenue mobilization recommendations
- Prioritize pro-poor fiscal adjustment and measures that improve fairness and burden sharing (Annex V referenced in source).
- Possible relatively quick measures include:
  - Rationalizing VAT and import duty exemptions.
  - Restoring the top income tax bracket.
  - Replacing statutory CIT tax holidays with cost-based incentives.
  - Redesigning alcohol and tobacco excise rates.
  - Increasing the telecommunication tax rate.
  - Launching property tax reform.
  - Strengthening tax administration through audits and digitalization, including with IMF technical assistance on customs administration and the Ghana Revenue Authority (GRA) transformation program.

### Spending recommendations
- Rapidly bring spending to pre-pandemic levels while shifting composition toward social protection.
- Conduct a spending review to separate transitory COVID items from structural increases, analyze effectiveness, and prepare spending cuts.
- Phase out untargeted COVID-19 support schemes to free resources for social spending (e.g., boost the LEAP cash-transfer program and the new CLASS program).
- Achieve immediate savings by linking new financial sector payments to proceeds from claim recoveries and accelerating energy sector reform (including aligning electricity tariffs with cost-recovery levels).
- Acknowledge limits to spending cuts due to budget rigidities, particularly debt service and other incompressible items.

### Public financial management (PFM) and transparency
- Overall budgetary reporting practices continue in line with PFM legislation.
- More detailed public reporting of COVID-19 spending is needed: limited reporting hampers transparency and accountability and raises governance risks.
- Emergency procurement disclosure has been partial; no publication of procurement contracts or beneficial ownership information (legislation envisages such information be kept in a register and available upon request to the Registrar General).
- Authorities are planning a special external audit of COVID-19 spending, in addition to the regular Auditor General’s annual report to Parliament in June 2021.
- A rigorous audit of domestic arrears and related spending is crucial to correctly measure the deficit, understand fund use, and address control weaknesses.

### Public debt dynamics and risks
- Public debt increased from 23 percent of GDP in 2007 to 79 percent of GDP in 2020.
- Gross financing needs rose above 25 percent of GDP in 2020; debt service (including amortization) exceeded 129 percent of revenues.
- Adverse dynamics driven by large and persistent government deficits (including financial and energy sector costs) and rising interest costs relative to growth, with increasing share of external non-concessional and domestic debt.
- Debt Sustainability Analysis (DSA) assessment:
  - Ghana remains at high risk of external and overall debt distress under the baseline.
  - Public debt is assessed as sustainable provided credible and rigorous implementation of medium-term fiscal adjustment (such as the 2021 budget consolidation plan).
  - Key DSA indicators—PV of overall public debt to GDP, PV of external debt to GDP, external debt service to exports, and external debt service to revenues—are still projected to exceed threshold values in the baseline.
  - Forecasts are vulnerable to macroeconomic risks illustrated by downside scenarios and standard DSA shocks to exports, growth, and interest rates.
- 2021 budget financing strategy:
  - Relies heavily on domestic market financing despite a recent Eurobond issuance.
  - Risks: pushing domestic absorption capacity to the limit, interest rate pressures, private-sector crowding out, central bank financing, or further accumulation of arrears.
  - Authorities exploring additional external financing, including up to US$1 billion in sustainable (“green”) bonds to refinance domestic debt, and possibly reviving the “Agyapa Royalties” deal (noted opposition).
  - Emphasis that alternatives should be market based, fully transparent, and ensure value for money.

### Financing and cash flow figures (percent of GDP)
- Gross financing needs: 25.6 (2020) and 24.3 (2021).
- Overall balance: -15.2 (2020) and -14.0 (2021).
- Primary balance: -8.8 (2020) and -5.9 (2021).
- Interest payment: 6.4 (2020) and 8.0 (2021).
- Amortization: 10.4 (2020) and 10.4 (2021).
- Amortization composition: Domestic 5.0 (2020) and 5.6 (2021); External 5.3 (2020) and 4.8 (2021).
- Financing composition (percent of GDP): External 7.3 (2020) and 5.5 (2021); Emergency financing 1.6 (2020) and 0.0 (2021); Eurobond 4.4 (2020) and 4.0 (2021); Domestic 18.3 (2020) and 17.4 (2021) with Marketable 15.6 (2020) and 17.0 (2021), Non Marketable 2.7 (2020) and 0.4 (2021), of which Central Bank 2.6 (2020) and 0.0 (2021); Use of cash buffers 0.0 (2020) and 1.4 (2021).
- Nominal GDP used in comparisons: 383,486 (both budget and outcome).

### Debt management and statistics
- Pandemic led to higher domestic interest payments and shorter maturities:
  - Domestic interest payments rose from 4.3 to 4.8 percent of GDP in 2020.
  - Residual maturities shortened from 5.8 to 4.8 years.
- Government plans to use about US$400 million from the Eurobond issuance to repay domestic debt in 2021 to smooth payments and reduce costs.
- Authorities aim to increase the share of non-bank, long-term investors to reduce volatility and liquidity pressure, while avoiding rapid increases in maturities that lock in high interest costs.
- Recommendation to expand coverage of government debt statistics to include liabilities excluded from the government’s headline measure but included in staff’s public debt definition: ESLA debt, education (GETFund/Daakye), extrabudgetary funds such as Sinohydro, liabilities of non-financially autonomous SOEs such as Cocobod, other energy sector debt (last reconciled in 2018), and new domestic arrears incurred in 2020 once audited.

### Authorities’ views (as reported)
- Authorities stated large fiscal deficits reflected a decision to protect lives and livelihoods and committed to follow through on fiscal consolidation to guarantee macro stability.
- Authorities noted other 2020 expenditures indirectly related to COVID-19 (higher interest payments from increased borrowing, additional energy-related costs, additional financial sector costs to provide liquidity).
- Authorities quantify direct and indirect COVID-19 spending at 4.6 percent of GDP in 2020.
- Authorities emphasized non-inclusion of expenditure arrears in the 2020 fiscal deficit (arrears yet to be audited) and noted the 2021 budget and medium-term projections include an above-the-line arrears clearance plan.
- Authorities highlighted the importance of a forward-looking assessment of debt vulnerabilities and expressed confidence that rapid growth, commitment to stability, structural reforms, and capital market access will allow Ghana to address fiscal and debt vulnerabilities.

### Managing SOE and energy sector risks
- Energy sector costs weighed on the budget: government paid over 2 percent of GDP in the previous year to support the sector; sector shortfall projected to remain over US$1 billion per year until at least 2024.
- As of end-2018, sector cumulative arrears: US$2.75 billion (US$851 million owed to the private sector); a new debt reconciliation is underway.
- IPP renegotiations could reduce electricity costs by about 30 percent (saving US$220 million in 2022) but would involve government refinancing of IPP debt at below-market rates.
- Electricity tariffs remain significantly below cost recovery levels; business tariffs cross-subsidize household tariffs.
- Living Income Differential (LID) surcharge (US$400 per ton) raised cocoa incomes but created net operating loss for Cocobod and added domestic debt; Cocobod’s debt was 2.5 percent of GDP at end-2020.
- SIGA (oversight entity) is operational; framework for oversight, state ownership policy, corporate governance code, and dividend policy framework under development. State Ownership Report will review performance and financial results of 50 entities for 2020.

Box 2 — Key energy sector developments (extracted figures and facts)
- New ESLA bonds outstanding: GHS 7.63 billion at end-April 2021.
- Electricity tariffs represent 73 percent of cost recovery levels; tariffs increased just 5 percent since 2015. Tariff review scheduled for July (year implied in source).
- IPP renegotiations could reduce costs by 30 percent (saving US$220 million in 2022) but would refinance IPP debt worth US$900 million at a lower rate (implying a 3 percent interest rate subsidy).
- Contract cancellation cost: US$170 million (GPGC Limited).
- Electricity distribution technical losses: GHS 3 billion in 2018.
- Government paid US$168 million in outstanding take-or-pay obligations to the Sankofa project contractors; new arrears of US$170 million have accumulated.
- Tema LNG project will increase gas oversupply and cost US$200-300 million per year under a 17-year take-or-pay agreement.
- Performance and debt data for the sector is patchy and outdated; latest publicly available debt data is from 2018.

*Source: IMF staff calculations and Ghanaian authorities.*

### 42.      A tighter monetary policy stance could be needed if inflationary pressures increase.

### 42.      A tighter monetary policy stance could be needed if inflationary pressures increase.

### Inflation outlook and monetary policy stance
- Inflation moderated recently as the jump in food prices linked to the April 2020 lockdown was fully incorporated.
- Inflation risks to monitor:
  - rising import prices,
  - higher fuel and transportation fares,
  - budget revenue measures.
- Recommendation: leverage IMF technical assistance on monetary policy analysis and forecasting to monitor risks.
- Survey-based expectations currently remain within the inflation target range (Figure 6).
- Pressures from rising US treasury yields have not materialized so far, with over US$1 billion net portfolio inflows in the first five months of 2021, but additional global rate increases could lead to exchange rate pressures.
- Staff appraisal:
  - The monetary policy stance after the recent policy rate cut is still broadly appropriate provided fiscal consolidation proceeds as planned and appropriate exchange rate flexibility is allowed.
  - Space for further cuts is limited and the Bank of Ghana (BOG) should stand ready to tighten if inflationary pressures materialize, including if progress towards fiscal adjustment is slower than anticipated.

### Exceptional BOG lending to government and monetary financing risks
- The BOG provided GHS 10 billion in direct budget financing under the APP through two 10-year bonds indexed to the policy rate, with a two-year grace period.
- Other measures taken by the BOG in 2020:
  - monetized the costs of reimbursing depositors in failed SDIs,
  - securitized government overdrafts and interest payments due on nonmarketable debt.
- Impact in 2020: monetary financing had little impact on inflation due to lower nominal demand from COVID-19, exchange rate stability, and the one-off nature of the APP.
- Risks of continued monetary financing:
  - could quickly lead to inflation and exchange rate pressures,
  - could undermine the financial and personal autonomy of the central bank.
- Policy recommendations:
  - expedite renewal of the BOG-MOF memorandum of understanding limiting monetary financing that expired last year,
  - appoint without further delays a new BOG Board (the previous Board was dissolved after the elections in line with the law).

### Quantified BOG net lending to government, 2020 (Percent of GDP)
- 10-year APP bonds: 2.6
- Bond monetization: 1.5
- Securitized GOG overdraft: 0.6
- Securitized interest: 0.2
- Increase in GOG deposits at BOG: -0.6
- Total: 4.4

### FX pressures, reserves, and exchange rate policy
- Main BOG FX inflows: cocoa exports (with tentative plans to purchase monetary gold domestically).
- FX outflows are larger and mostly incompressible, driven by:
  - government debt service,
  - energy payments,
  - FX sales to domestic banks.
- Result: sizeable FX cash flow deficit covered through borrowing to date.
- Risks: large FX gross borrowing needs can quickly deplete reserves and lead to a sudden depreciation if market access is curtailed.
- Policy recommendations:
  - greater exchange rate flexibility, with interventions limited to smoothing sharp fluctuations, to reduce FX borrowing needs and lower the FX risk premium in domestic interest rates.
- Capital flow management measure in place: a limit of US$10,000 withdrawal per trip and per annual transfer without documentation; removal would be consistent with the Fund’s Institutional View on CFMs.

### Financial sector cleanup, fiscal costs, and banking sector developments
- Financial sector bailout costs:
  - GHS 22.7 billion by end of 2020, or 6.8 percent of GDP.
  - New operations expected in 2021, including additional payments to investors in failed asset management companies and recapitalization of the state-owned National Investment Bank (NIB).
  - Government recoupment measures include recoveries and the 5 percent levy on bank profits announced in the 2021 budget.
- Banks’ capitalization and regulatory context:
  - Capital adequacy is well above the minimum regulatory threshold of 11.5 percent.
  - Regulatory relaxation (forbearance) mitigated asset quality deterioration and provisioning needs; easing will have to be rolled back carefully as the economy recovers.
- Government lending to banks:
  - Share of government lending to total bank assets reached 44.7 percent in February 2021, from 36.3 percent a year before.
  - Effects: props up bank profitability but undermines private-sector credit growth and increases balance sheet risks.
  - Rising sovereign exposure could create bank balance sheet losses if government yields increase, amplifying debt rollover risks.
- BOG regulatory reforms and actions:
  - drafting Pillar II regulations and accompanying risk management guidelines,
  - reviewing the SDI subsector with World Bank technical support after resolution of over 400 failed SDIs in 2019,
  - revised Emergency Liquidity Assistance framework,
  - finalizing directives on liquidity management, supervisory review and evaluation process, and corporate governance disclosure under ongoing Basel II/III reforms.
- AML/CFT improvements with IMF technical assistance helped Ghana exit the FATF “grey list” in June 2021 following an ICRG on-site assessment.
- Digital payments and financial inclusion:
  - measures taken at pandemic onset: reviewed transaction size limits and KYC requirements, reduced mobile money transaction fees,
  - ongoing efforts: digitizing government and utility payments, promoting agent banking, supporting FinTech to lower remittance costs and promote digital crowdfunding, improving interoperability, piloting a central bank digital currency, introducing universal QR payment codes.
  - Financial Sector Development and Inclusion Strategy target: reach 85 percent of the population with access to formal financial services by 2023, focusing on women, rural and poor citizens.

### Fiscal outlook, debt sustainability, and reform priorities (Staff appraisal highlights)
- 2020 fiscal outcomes and debt:
  - record fiscal deficit of 15.2 percent of GDP in 2020, plus 2.1 percent of GDP in arrears-financed spending.
  - public debt reached 79 percent of GDP, not including debt of some large SOEs, the energy sector, and the 2020 domestic arrears.
- Medium-term financing risks:
  - average annual gross financing needs of 22 percent of GDP over the medium term imply continued solvency and rollover risks.
- Recommended fiscal strategy:
  - more ambitious fiscal consolidation beyond the 2021 budget,
  - additional and more progressive revenue measures,
  - faster return to pre-pandemic level of spending with composition shifted toward social, health, and development spending,
  - accelerate measures if fiscal risks or budget financing challenges materialize.
- Transparency and governance:
  - planned audit of COVID-19 emergency spending and new expenditure arrears is welcome; publication of crisis-related procurement contracts and associated beneficial ownership information is essential.
- SOE and energy sector risks:
  - reporting and monitoring improving, but the sector—particularly energy—remains a source of fiscal risks;
  - Cocobod’s plans to issue a collateralized external loan should be closely coordinated with government and included in public debt.
- External buffers and financing:
  - gross international reserves at an all-time high but still dependent on external borrowing;
  - recommended: gradual reduction in FX borrowing needs supported by greater exchange rate flexibility and smaller financing needs;
  - potential SDR allocation could shore up international reserves and, if concessional financing is not available, finance the vaccination rollout.
- Safeguards and governance at the BOG:
  - updated safeguards assessment finalized in June 2021;
  - governance gap from the BOG Board’s hiatus presents oversight challenges;
  - vulnerabilities in the legal framework remain, including limits on monetary financing; recommended legal reforms should be revisited when opportune.
- CARES program and structural transformation:
  - CARES can accelerate growth but needs prioritization given limited fiscal resources;
  - initial focus suggested on a few export industries in agro-processing or manufacturing that could achieve economies of scale and create jobs without adding to public debt;
  - complement with diversification in tourism, finance and IT, and the digital transition to reduce corruption, boost tax revenues, and improve service delivery.
- Capacity development:
  - IMF technical assistance focused on domestic revenue mobilization, banking supervision, liquidity management, stress testing, macro-forecasting, AML/CFT, and statistics.

*Source: IMF staff report content provided in the supplied PDF excerpt.*

### 64.      It is proposed that the next Article IV consultation take place on the standard

### 1ghaea2021001 - 64.      It is proposed that the next Article IV consultation take place on the standard

### National accounts, prices, and growth projections
- Real GDP (annual growth, percent): 2019: 6.5; 2020: 0.4; 2021: 4.7; 2022: 6.2; 2023: 4.7; 2024: 5.0; 2025: 5.8.
- Non-oil GDP (annual growth, percent): 2019: 5.8; 2020: 0.9; 2021: 6.4; 2022: 5.9; 2023: 4.9; 2024: 5.3; 2025: 5.2.
- Oil and gas GDP (annual growth, percent): 2019: 14.4; 2020: -4.6; 2021: -14.6; 2022: 10.3; 2023: 1.8; 2024: 0.3; 2025: 15.6.
- Real GDP per capita (annual change, percent): 2019: 4.3; 2020: -1.7; 2021: 2.6; 2022: 4.0; 2023: 2.6; 2024: 2.9; 2025: 3.8.
- GDP deflator (annual change, percent): 2019: 8.5; 2020: 7.1; 2021: 11.2; 2022: 7.7; 2023: 7.2; 2024: 6.9; 2025: 6.1.
- Consumer price index (annual average): 2019: 7.1; 2020: 9.9; 2021: 8.9; 2022: 8.5; 2023: 8.0; 2024: 6.9; 2025: 6.1.
- Gross capital formation (percent of GDP): 2019: 19.4; 2020: 19.2; 2021: 18.6; 2022: 18.7; 2023: 19.4; 2024: 19.9; 2025: 20.5.
- National savings (percent of GDP): 2019: 16.7; 2020: 16.1; 2021: 16.3; 2022: 15.2; 2023: 14.9; 2024: 15.1; 2025: 16.4.

### Fiscal position and public debt (central government, cash basis)
- Central government revenue (percent of GDP): 2019: 14.3; 2020: 12.9; 2021: 14.9; 2022: 15.0; 2023: 15.0; 2024: 15.2; 2025: 15.3.
- Central government expenditure (percent of GDP): 2019: 21.8; 2020: 28.2; 2021: 28.9; 2022: 25.4; 2023: 24.5; 2024: 24.5; 2025: 23.4.
- Overall balance (percent of GDP): 2019: -7.5; 2020: -15.2; 2021: -13.9; 2022: -10.5; 2023: -9.5; 2024: -9.3; 2025: -8.1.
- Overall balance excluding financial and energy sector related costs (percent of GDP): 2019: -4.7; 2020: -11.4; 2021: -10.0; 2022: -9.5; 2023: -8.5; 2024: -8.2; 2025: -7.0.
- Primary balance (percent of GDP): 2019: -1.8; 2020: -8.8; 2021: -5.9; 2022: -1.4; 2023: -0.2; 2024: 0.3; 2025: 1.3.
- Primary balance excluding financial and energy sector related costs (percent of GDP): 2019: 0.9; 2020: -4.1; 2021: -2.0; 2022: -0.3; 2023: 0.8; 2024: 1.4; 2025: 2.3.
- Public debt (gross, percent of GDP): 2019: 62.9; 2020: 78.9; 2021: 83.5; 2022: 84.9; 2023: 86.4; 2024: 87.4; 2025: 87.0.
- Central Government Debt excluding ESLA bond (percent of GDP): 2019: 61.2; 2020: 76.9; 2021: 81.9; 2022: 83.5; 2023: 85.1; 2024: 86.3; 2025: 86.0.

### Budget composition and key fiscal items (percent of GDP and GHS millions)
- Taxes (percent of GDP): 2019: 12.5; 2020: 12.0; 2021: 13.4; 2022: 13.5; 2023: 13.7; 2024: 14.0; 2025: 14.2.
- Interest (percent of GDP): 2019: 5.5; 2020: 6.4; 2021: 8.0; 2022: 9.1; 2023: 9.3; 2024: 9.6; 2025: 9.4.
- Net lending/borrowing (overall balance, GHS millions): 2019: -25,940; 2020: -58,457; 2021: -62,259; 2022: -53,436; 2023: -54,600; 2024: -59,631; 2025: -58,311.
- Revenue (GHS millions): 2019: 49,767; 2020: 49,565; 2021: 66,620; 2022: 76,409; 2023: 85,890; 2024: 97,912; 2025: 110,388.
- Expenditure (GHS millions): 2019: 75,707; 2020: 108,023; 2021: 128,879; 2022: 129,844; 2023: 140,491; 2024: 157,544; 2025: 168,699.
- Oil revenue (percent of GDP): 2019: 1.2; 2020: 0.8; 2021: 1.4; 2022: 1.4; 2023: 1.2; 2024: 1.4; 2025: 1.2.
- Proceeds from Energy Sector Levies Act (ESLA) (percent of GDP): 2019: 0.5; 2020: 0.5; 2021: 0.6; 2022: 0.7; 2023: 0.8; 2024: 0.9; 2025: 1.0.

### Monetary developments and credit
- Broad money (M2+, annual change, percent): 2019: 21.6; 2020: 29.7; 2021: 22.1; 2022: 13.5; 2023: 12.1; 2024: 13.2; 2025: 14.1.
- Credit to the private sector (commercial banks, annual change, percent): 2019: 4.7; 2020: 10.6; 2021: 8.6; 2022: 7.8; 2023: 8.6; 2024: 10.0; 2025: 13.4.
- Base money (annual change, percent): 2019: 33.6; 2020: 25.8; 2021: 26.9; 2022: 6.8; 2023: 9.4; 2024: 12.6; 2025: 13.6.
- Policy rate (end of period, percent): 2019: 16.0; 2020: 14.5.

### External sector, reserves, and balance of payments
- Current account (US$ millions): 2019: -1,835; 2020: -2,133; 2021: -1,680; 2022: -2,869; 2023: -3,923; 2024: -4,550; 2025: -4,160.
- Current account (percent of GDP): 2019: -2.7; 2020: -3.1; 2021: -2.2; 2022: -3.5; 2023: -4.5; 2024: -4.8; 2025: -4.1.
- Exports, f.o.b. (US$ millions): 2019: 15,634; 2020: 14,472; 2021: 16,638; 2022: 17,773; 2023: 18,242; 2024: 19,125; 2025: 21,342.
- Imports, f.o.b. (US$ millions): 2019: -13,352; 2020: -12,428; 2021: -13,899; 2022: -16,125; 2023: -17,807; 2024: -19,446; 2025: -21,034.
- Gross international reserves (millions of US$): 2019: 6,607; 2020: 6,962; 2021: 7,494; 2022: 7,435; 2023: 6,886; 2024: 6,971; 2025: 7,052.
- Gross international reserves (months of prospective imports): 2019: 3.4; 2020: 3.2; 2021: 3.2; 2022: 3.0; 2023: 2.6; 2024: 2.6; 2025: 2.4.
- Net international reserves (millions of US$): 2019: 5,247; 2020: 4,559; 2021: 5,212; 2022: 5,285; 2023: 4,873; 2024: 5,135; 2025: 5,512.

### External financing requirements and flows
- Total financing requirements (US$ millions): 2019: -7,201; 2020: -5,355; 2021: -7,131; 2022: -7,372; 2023: -7,726; 2024: -9,450; 2025: -8,929.
- Total financing (US$ millions): 2019: 6,975; 2020: 5,665; 2021: 7,131; 2022: 7,373; 2023: 7,727; 2024: 9,450; 2025: 8,929.
- Foreign direct investment (net, US$ millions): 2019: 3,292; 2020: 1,333; 2021: 2,598; 2022: 2,871; 2023: 3,509; 2024: 4,232; 2025: 5,051.
- Portfolio investment (net, US$ millions): 2019: 2,302; 2020: 1,562; 2021: 3,000; 2022: 2,739; 2023: 2,372; 2024: 3,609; 2025: 2,509.
- Disbursement from external creditors (US$ millions): 2019: 1,027; 2020: 1,201; 2021: 1,473; 2022: 1,720; 2023: 1,834; 2024: 1,626; 2025: 1,431.

### Financial sector soundness indicators
- Regulatory capital to risk weighted assets: 2015: 17.8; 2016: 17.8; 2017: 15.6; 2018: 21.9; 2019: 20.9; 2020: 19.8.
- Nonperforming loans to total gross loans (percent): 2015: 14.7; 2016: 17.3; 2017: 21.6; 2018: 18.2; 2019: 13.9; 2020: 14.8.
- Return on assets (percent): 2015: 3.3; 2016: 2.5; 2017: 2.4; 2018: 2.3; 2019: 2.9; 2020: 3.0.
- Liquid assets/total deposits (percent): 2015: 34.3; 2016: 33.9; 2017: 35.8; 2018: 36.8; 2019: 35.2; 2020: 28.9.

### IMF exposure, obligations, and capacity to repay indicators
- Outstanding Fund credit (in millions of SDRs): 2020: 145; 2021: 9.4; 2022: 13.7; 2023: 12.9; 2024: 11.93; (table shows multi-year schedule and projections).
- Total obligations based on existing and prospective credit (in millions of US$): 2020: 120.2; 2021: 132.1; 2022: 137.3; 2023: 177.6; 2024: 295.9; 2025: 356.4; later years decline per table.
- Fund obligations as percent of gross international reserves (selected years): 2020: 1.6; 2021: 1.8; 2022: 2.0; 2023: 2.5; 2024: 4.2; 2025: 4.6.

### Key policy recommendations and implementation progress (Annex I)
Fiscal policy recommendations and progress:
- Achieve primary surplus in 2020 and the medium term: Primary surplus not achieved in 2020, partly due to the pandemic.
- Increase domestic revenue mobilization: The 2020 tax ratio declined. The 2021 budget targets an ambitious increase. DRM efforts continue, with support from IMF TA.
- Implement PFM reforms: The fiscal rule was suspended in 2020; authorities aim to return to it by 2024. Limited progress on PFM reforms, with weaker spending controls.
- Clear arrears: The 2021 budget includes a plan to clear GHS 8.2 billion in arrears over the next 4 years.
- Improve public debt redemption profile: Several LMOs conducted, including Eurobond issuances in 2020 and 2021.

Monetary and FX policy recommendations and progress:
- Refrain from monetary financing: The MOF-BOG memorandum expired in 2020. The BOG provided GHS 13.4 billion in budget financing in 2020 in response to the pandemic and monetized GHS 5.6 billion financial sector bailout bonds.
- Limit FX intervention and deepen FX market: The BOG has conducted forward FX auctions since Oct 2019 to mitigate exchange rate volatility.
- Review liquidity assistance framework: The BOG issued a new ELA framework with IMF TA support.
- Remove capital flow measures (CFMs): The US$10,000 withdrawal limit per trip and per annual transfer without documentation remains in place and is inconsistent with the Fund’s Institutional View on CFMs.

Financial sector policy recommendations and progress:
- Restore financial sector stability: The financial sector clean-up is nearly complete except for NIB and asset management companies; review of SDI sector ongoing; BOG introduced measures to reduce NPLs and other legal and regulatory reforms.
- Strengthen AML/CFT framework: FATF placed Ghana on “grey list” in October 2018; Ghana substantially completed its action plan and exited the “grey list” in June 2021.

Structural and governance recommendations and progress:
- Restore energy sector SOE viability: ESRP has made limited progress; some take-or-pay contracts renegotiated; ESLA bonds issued in 2020 to repay legacy debts.
- Improve SOE governance and transparency: Creation of SIGA has helped foster oversight of SOEs.
- Close gaps in legal framework criminalizing corruption: Progress has stalled; several challenges faced by the Auditor General office.

*Sources: Ghanaian authorities; and Fund staff estimates and projections.*

### Annex II. Impact of the COVID-19 Pandemic on Ghana

### Annex II. Impact of the COVID-19 Pandemic on Ghana

### Health Toll and Response
- As of June 7, 2021:
  - Confirmed cases: 94,444
  - Deaths: 789
- Epicenter: metropolitan area around Accra, accounting for more than half of recorded cases.
- Fatalities nearly doubled in early 2021 amid a second wave dominated by the Alpha variant.
- Government public health measures (from March 16, 2020):
  - Restrictions on mass gatherings, partial lockdown, travel restrictions, border and school closures.
  - Pooled testing approach adopted to boost testing capacity.
  - Use of drones to collect COVID-19 samples from more than 1,000 health facilities.
  - Restrictions on international travel eased on September 2, 2020.
- Vaccine procurement and rollout:
  - Initial plan: vaccinate 20 million Ghanaians (about two-thirds of the population) by end-2021.
  - Announced US$200 million vaccination plan, including US$51 million in operational costs; with support from the World Bank and the COVAX Facility to procure vaccines for 13 million people.
  - Plan assumptions: average vaccine cost of US$7 per dose and around 5 percent wastage rate.
  - Private sector to finance another 6 million vaccines.
  - Mass vaccination rollout started March 1, 2021, backed by first-ever COVAX shipment of 600,000 Oxford/AstraZeneca doses.
  - Additional vaccine receipts:
    - 314,850 AZ doses from MTN
    - 50,000 AZ doses from India
    - 16,000 Sputnik V doses from UAE
    - May 7 delivery: 350,000 AZ doses through COVAX (part of larger 1.7 million consignment allotted earlier to DRC)
    - In process: delivery of 300,000 more Sputnik V doses out of 3 million doses procured from the UAE.
  - Limited shipments through COVAX prompted procurement from alternative, costlier sources.

### Fiscal Support
- Coronavirus Alleviation Program (CAP) in 2020:
  - Size: 2.3 percent of GDP.
  - Focus: health care spending (0.5 percent of GDP) and economic support (1.8 percent of GDP) to households and firms.
- Healthcare support via National COVID-19 Emergency Preparedness and Response Plan (EPRP):
  - Main financing: about US$100 million from the World Bank.
  - Objectives: (i) manage and contain spread of virus; (ii) strengthen surveillance, diagnosis, and case management capacity.
  - Achievements through EPRP by end-2020:
    - Hired about 37,000 new health workers.
    - Increased testing facilities from two to sixteen.
    - Acquired PPE for health workers and test kits.
    - Provided training and allowances to health workers.
    - Supported information campaign and national sanitization program of schools; provided millions of masks and sanitizer for school reopening.
- Economic support under CAP:
  - Households:
    - Government subsidized water and electricity bills from April to December 2020.
    - Government fully covered electricity consumption for 1 million consumers and paid half of the electricity bill for the rest of consumers.
    - More than 10 million Ghanaians received free water.
    - About 470,000 families received dry foods.
    - 2 million cooked foods distributed in Accra and Kumasi regions.
  - Private sector:
    - About 270,000 SMEs benefited from government subsidies, saving about 677,000 jobs; more than two-thirds of beneficiary firms were female-owned.
    - CAP provided technical training to about 8,000 firms.
    - SMEs producing healthcare equipment and medication received financial support and exemptions.
    - Guarantees were made available in coordination with Bank of Ghana, allowing access to loans of about GHS7 billion.
- COVID-19 Alleviation and Revitalization Enterprise Support (CARES) in 2021:
  - Expected cost: about US$16 billion over 4 years.
  - Financing signal: at least 70 percent of the program relying on private-sector funds; implementation contingent on available financing.
  - 2021 budget under CARES: about 1 percent of GDP total, of which 0.7 percent of GDP for healthcare and 0.3 percent of GDP for economic support (including creation of a development bank).
  - CARES spending expected to be gradually phased out over the medium term.

### Economic and Social Impact
- Lockdown timing and survey details:
  - Partial lockdown between March 30 and April 23, 2020.
  - Ghana Statistical Service (GSS) household survey: nationally-representative panel with 3,265 completed phone interviews, first wave between June 10–25, 2020.
- Household impacts (March–June 2020):
  - 77 percent of households saw a decrease in income.
  - 77 percent experienced higher food prices.
  - Income reductions affected households across all 16 regions; more prevalent among non-farm family businesses, primary-sector activities, and those relying on remittances or financial assistance.
  - Over half of all households (52 percent) reported lowering food consumption to cope.
- Education and healthcare disruptions:
  - About 17 percent of all children missed a scheduled vaccination appointment between March and June 2020.
  - Just over a third of primary school-age children did not engage in any form of learning while at home.
  - Almost 43 percent of children enrolled in school feeding programs (nearly one-third of all school-age children) stopped receiving subsidized meals once schools closed.
- Localities and crime:
  - More than one-third of localities surveyed reported an increase in crime, including almost half of urban localities affected by the partial lockdown.
- Business and labor impacts:
  - More than one-third of surveyed business establishments reported temporary or permanent closures during March and April 2020.
  - 91 percent of firms experienced lower sales during that period.
  - Labor adjustments:
    - 46 percent of firms reduced wages, affecting more than one-quarter of employed workers.
    - 4 percent of firms reported layoffs, impacting 1.4 percent of workers.
    - By late summer: only 8 percent of businesses reported still being temporarily and permanently closed; layoffs share remained low at 1 percent (corresponding to 0.4 percent of workers).
- Recovery indicators:
  - By late summer, wage reductions affected 10 percent of workers (about one-quarter of firms still operating with reduced wages), indicating mostly smaller firms.
- Digital transition:
  - About 38 percent of firms reported a new or increased use of mobile money for sales in months after lockdown; this grew to 50 percent by late summer.
  - 9 percent started or increased internet use for sales.
- Coverage and targeting of government direct support:
  - Between March and June 2020:
    - 3.9 percent of surveyed households had received direct assistance from the government (mostly free food or in-kind transfers).
    - 8.9 percent of households had received any form of assistance from any institution.
  - Fewer than one in ten firms reported receiving government support by August/September (up from about 3 percent in May/June).
  - Among firms that had not received support:
    - One-third were not aware of government support policies.
    - One-quarter had applied but not yet received support.
  - Utility subsidy reach:
    - 25 percent of localities reported no benefit from electricity support.
    - 78 percent of localities reported no benefit from water support.
    - Low-income electricity consumers benefited least from utility transfers.
- Firm demand for support (desired policies):
  - Firms sought cash-flow support including loans with subsidized interest, direct cash transfers, deferral of rent/mortgage/utility payments, tax deferrals, access to new credits, fiscal exceptions or reductions, formalization of business, training, wage subsidies, IT training.
- Reasons for not receiving support (percent of firms):
  - Not eligible, too difficult to apply, not expecting to get it, applied but not received it, not aware (survey waves May/June and August/September).

### Risk Assessment (selected risks and mitigation)
- Sharp rise in global risk premia (Relative Likelihood: High; Expected Impact: High)
  - Impact if realized:
    - Reassessment triggers risk-off event; debt rollover challenges, sharp fiscal contraction, erosion of FX buffers, depreciation pressures, higher interest rates, potential continued direct budget financing by BOG.
  - Policies to mitigate:
    - Implement credible medium-term fiscal adjustment strategy
    - Maintain exchange rate flexibility to preserve FX buffers
    - Formulate fiscal contingency measures in case of tighter financing conditions
    - Flexible cash management to adjust expenditures with available financing
- Recurring COVID-19 outbreaks (Relative Likelihood: High; Expected Impact: High)
  - Impact if realized:
    - New waves may require further mobility restrictions, stalling recovery; could trigger capital outflows, depreciation and inflation pressures.
  - Policies to mitigate:
    - Continue mass vaccination, within existing vaccine supply constraints
- Contingent liabilities from SOEs or financial and energy costs (Relative Likelihood: High; Expected Impact: High)
  - Impact if realized:
    - Lower private-sector credit growth, higher public-sector borrowing needs, inefficient electricity provision hurting growth and debt sustainability.
  - Policies to mitigate:
    - Enhance financial sector supervision
    - Implement the ESRP
    - Renegotiate take-or-pay contracts while managing reputational risks and avoiding unilateral termination of contracts
- Volatility in commodity prices (Relative Likelihood: Medium; Expected Impact: Medium)
  - Impact if realized:
    - Decline in export prices lowers exports, weakens current account, creates exchange rate pressures.
  - Policies to mitigate:
    - Diversify exports by improving business environment and supporting structural transformation
- Macroeconomic policy uncertainty (Relative Likelihood: Medium; Expected Impact: High)
  - Impact if realized:
    - Weak policies worsen debt sustainability; bold reforms could improve fiscal stance more than expected.
  - Policies to mitigate:
    - Enhance the fiscal rule by choosing a debt path to anchor fiscal policy
    - Strengthen revenue mobilization to meet development financing needs
- Higher frequency/severity of climate-related natural disasters (Relative Likelihood: Medium; Expected Impact: Medium)
  - Impact if realized:
    - Shortened growing seasons, constrained cocoa production, limited hydropower capacity; poorest rural households most impacted.
  - Policies to mitigate:
    - Continue adaptation and mitigation efforts, improve energy efficiency and diversify energy sources
    - Shift budget towards social spending, climate resilience, and green investments

### External Sector Assessment
- Overall assessment:
  - The external position in 2020 was stronger than level implied by fundamentals and desirable policies, aided by gold exports, remittances, and import compression.
  - Over the medium term, external position expected to deteriorate: wider current account deficits and falling reserves due to high external financing needs (mainly debt service), decline in oil export volumes, and services trade deficit.
- Recommendations:
  - Pursue aggressive fiscal consolidation to contain rising interest costs, maintain market access and non-resident interest in domestic market.
  - Improve debt management to mitigate risks of volatility of fund flows caused by external factors.
  - Limit central bank FX interventions to smoothing out sharp exchange rate fluctuations to protect reserves.
  - Implement structural measures to improve the investment climate, especially in leading export sectors, and shift financing for capital investment from debt to FDI.
- Foreign assets and liabilities:
  - External debt rose from 39.1 to 44.5 percent of GDP in 2020.
  - Gross foreign exchange reserves fell from 12 to 10 percent of GDP in 2020.
  - External debt expected to peak at 46.7 percent of GDP in 2024.
  - Gross reserves projected to decline to 5.3 percent of GDP in 2024.
  - Policies to shift financing for capital spending from government budget to FDI would help contain growth of external debt.
- Current account:
  - 2020 current account deficit widened by 0.3 percentage points to 3.1 percent of GDP.
  - Commodity movements:
    - Sharp fall in oil export prices and volumes partly offset by rise in gold prices.
    - Cocoa exports broadly flat (harvest sold before pandemic).
    - Tourism receipts fell sharply.
  - Imports of goods and services fell from 40.2 to 35.8 percent of GDP in 2020.
  - Remittances held steady at 5 percent of GDP.
  - Current account has steadily improved over past five years; imports of goods and services fell from 42.4 to 40.2 percent of GDP between 2015–2019.
  - Over next five years, current account expected to worsen mainly due to high interest costs; trade balance expected to remain in surplus, averaging 0.5 percent of GDP over the next five years.
  - Average current account deficit expected to rise from 3.5 of GDP percent over the past five years to (text truncated in source).

*Annex II. Impact of the COVID-19 Pandemic on Ghana — IMF staff summary as presented in the provided content.*

### 4.3 percent of GDP over the next five year.

### 4.3 percent of GDP over the next five year.

### Current account assessment and CA-gap
- The EBA-Lite CA model estimates a positive current account gap of 3 percent of GDP for 2020.
- Cyclically adjusted current account balance: -0.3 percent of GDP.
  - Cyclical contributions (from model): (-)-1.5
  - COVID-19 adjustor (+): 1/1.5
  - Additional temporary/statistical factors (+): 0.0
  - Natural disasters and conflicts (-): -0.1
- Adjusted CA: -0.3
- CA Norm (from model): 2/-3.3
  - Adjustments to the norm (+): 0.0
- Adjusted CA Norm: -3.3
- CA Gap: 3.0 0.1 NA
  - o/w Relative policy gap: -3.0
- Elasticity: -0.25
- CA-Actual: -3.4
- Notes on adjustments:
  - A 1.5 percent adjustment applied to reflect the negative deviation from trend growth and terms of trade in 2020 and to strip out the transient component of the COVID-19 shock (0.9 percent of GDP from the impact on oil exports and 0.6 percent of GDP from the impact on tourism).

- Factors explaining the positive CA gap:
  - Ghana’s mix of exports and imports, with gold prices usually moving in the opposite direction of oil prices, and cocoa providing stabilizing effects due to forward contracts.
  - Remittances performed better than expected despite the global COVID-19-related slowdown.
  - Fall in FDI-related imports acted as an automatic stabilizer, mitigating the negative impact of fiscal stimulus on the current account.

- Policy implications:
  - The policy gap estimated at -3 percent is dominated by the impact of expected fiscal adjustment.
  - Closing the policy gap would help mitigate the expected deterioration in the external position.
  - Structural measures to improve the investment climate, especially in leading export sectors, would strengthen the external position by reducing dependence on debt financing.

### Real Exchange Rate (REER)
- The EBA-Lite REER model estimates an undervaluation, although of a smaller magnitude than the CA model predictions.
- REER continued a downward trend of the previous ten years; contributing factors include output-per-worker, institutional index, real interest, and the level of aid and remittances, with demographics also affecting the outcome.
- The gap between actual and fitted REER widened in 2020 to 0.4 suggesting an undervaluation, though much smaller than predicted by the CA module.
- The domestic currency appreciation needed to close the current account gap in the CA module is larger than the appreciation needed for the REER module.

### Capital and financial accounts: flows and outlook
- Capital and financial account surplus declined from 4.6 percent of GDP in 2019 to 0.9 percent of GDP in 2020 due to a fall in FDI and portfolio flows.
  - FDI fell from 4.4 percent of GDP to 2.7 percent of GDP.
  - Net portfolio flows fell from 3.4 percent of GDP to 2.3 percent of GDP despite a US$3 billion Eurobond issued shortly before the onset of the pandemic.
- Over the past five years the capital and financial account averaged 3.7 percent of GDP reflecting strong FDI and portfolio flows.
  - Net positive portfolio flows averaged 2.7 percent of GDP thanks to Eurobond issuances and non-resident purchases of local currency debt.
- Over the next five years the capital and financial account is expected to average 4.5 percent of GDP assuming continued access to international capital markets and a recovery in FDI flows to pre-pandemic levels.
- Risks:
  - A sudden change in global liquidity conditions, a loss of confidence in Ghana assets, or broader loss of confidence in emerging and frontier markets could undermine the financial account.
- Policy recommendations:
  - Maintain market credibility through strong fiscal consolidation to ensure continued market access and non-resident interest in the domestic market.
  - Improve debt management to mitigate risks of volatility of fund flows caused by external factors.

### Foreign exchange intervention and reserves
- Gross Foreign Assets, including the oil fund, were broadly stable at 3.2 months of next year’s imports, 10 percent of GDP, and 150 percent of foreign currency deposits.
- Gross reserves were stabilized by a US$3 billion Eurobond issue early in 2020 and US$1 billion RCF disbursement; these inflows helped stabilize the exchange rate, which depreciated by 5 percent over 2019.
- Gross reserves at 3.2 months of 2021 imports represent 80 percent of the IMF LIC reserve adequacy metric.
  - The metric suggests an adequate level of reserves would be equal to 4 months of next year’s imports based on a cost of holding reserves of 4.6 percent, corresponding to the average effective interest rate on external debt for the past five years.
- While gross international reserves are at an all-time high, they remain dependent on external borrowing.
- Central bank intervention:
  - The central bank intervened regularly to smooth fluctuations; the level of interventions was less than 0.3 percent of GDP or 3 percent of reserves per month, not substantial enough to cause an overvaluation of the exchange rate per EBA-lite CA and REER models.
- Reserve projections and drivers:
  - Reserves are projected to fall over the medium term due to widening external financing needs, bottoming out at 2.4 months of next year’s imports between 2025 and 2026.
  - With non-interest current account in surplus throughout the forecast horizon, the main drain on reserves stems from debt service costs.
- Policy recommendations:
  - Continue to limit central bank interventions to smoothing out sharp fluctuations.
  - In the medium-term, stabilizing reserves will hinge on reducing the debt burden.

### Options to mobilize domestic revenues (Annex V) — findings and reform pillars
- Context:
  - Before the pandemic, Ghana’s tax-to-GDP ratio had grown to just below 13 percent, but remained 7 percent of GDP below the estimated tax frontier.
  - The recent budget envisages an ambitious revenue increase in 2021 relying on both tax policy and revenue administration measures.
  - International experience: Uganda and Senegal achieved revenue increases of around 3 percent of GDP over five to seven years with concentrated structural reforms.
- Six pillars for reform (summary):
  1. Simplification
     - Streamline the system, reduce proliferation of earmarked fees and levies (at least seven specific and ad-valorem levies on fuel products).
     - Address complexity in consumption taxes: non-creditable NHIL, GETFund Levy, VAT, and many exemptions.
     - Revise technical inconsistencies and ambiguities in tax legislation.
  2. Base broadening
     - Tax expenditures estimated at least 4-5 percent of GDP.
     - Draft Tax Exemptions Bill seeks to centralize and improve transparency of exemptions.
     - Remove non-standard statutory VAT and import duty exemptions that disproportionately benefit higher income groups (e.g., exemptions on motor vehicles, fee-based financial services and real estate).
     - Bring hydrocarbon products (now exempt) into the VAT net.
     - Replace reduced CIT rates and tax holidays (e.g., 1 percent rate for cocoa products, rural banks and mutual funds) with cost-based measures where needed.
  3. Leveraging underutilized tax handles
     - Non-fuel excises contributed only 0.1 percent of GDP in 2018 and 2019; comparators (Uganda, Kenya) raise over 2 percent of GDP in excise taxes.
     - Tobacco excises amount to 16 percent of the retail price (below WHO’s recommendation of 70 percent of the retail price).
     - Reform of alcohol and tobacco excises could raise as much as 0.45 percent of GDP.
     - Property tax currently raises approximately GHS 40 million per year (about 0.01 percent of GDP); reforms could yield 0.3 to 0.4 percent of GDP regionally.
     - 7.5 million properties nationwide now electronically tagged — use this to expand property tax base and consider flat rate alternatives where values are outdated.
  4. Progressivity
     - Enhance progressivity of the personal income tax system (higher rates or review allowances/deductions).
     - Improve VAT design (remove exemptions for financial services and real estate).
     - Use property taxes and consider temporary ‘solidarity’ taxes on businesses that performed well during the pandemic (2021 bank levy as an example).
     - Note: recent VAT and NHIL rate increases may be regressive and risk detrimental growth effects unless offset by effective social spending.
  5. Simplifying payments
     - Introduce simple structures and payment channels for informal sector to register and pay income tax easily.
     - Locate tax support centers closer to communities for tax education and collection.
  6. Improved administration and compliance
     - Digitalization efforts at ports have yielded revenue increases; digital ID rollout linking national IDs with taxpayer identification is important.
     - Plans to digitalize all payments to government, including payments to GRA.
     - Legislation mandating electronic fiscal devices (introduced in 2018) should be implemented to improve VAT compliance.
     - Pursue electronic filing of tax returns and risk-based compliance approaches targeting high-risk sectors (high-net worth individuals, extractive industries) and segments (large and medium taxpayers).
     - New Integrated Tax Administration System (ITAS) should be swiftly adopted.
     - IMF supporting GRA implementation of a multi-year transformation program funded under the Revenue Mobilization Trust Fund.

### Capacity development strategy (Annex VI) — priorities and background
- Role of CD:
  - CD is central to policy dialogue with Ghana and targets critical areas linked to risks and vulnerabilities identified in surveillance, while addressing COVID-19 related demands.
- Background achievements supported by CD:
  - Public Financial Management Act passed in 2016 and regulations in 2019; fiscal risk unit created and operationalized (supported by FAD TA).
  - Debt management improvements lengthened the debt profile and reduced rollover risks (supported by MCM TA).
  - Banking sector weaknesses addressed via resolution of nine banks, three bank mergers, and new regulatory directives on governance; MCM TA on bank resolution supported restructuring and BOG preparedness.
  - Efforts to align regulatory framework with Basel II/III (pillar 1) supported by resident advisor and short-term expert missions.
- CD unevenness and remaining needs:
  - Progress in revenue administration has been particularly slow despite extensive support.
  - TA recommendations largely outstanding for risk-based supervision and financial stability.
- CD priorities for the next three years (unchanged by the pandemic):
  - Fiscal CD: improve domestic revenue mobilization; implement ITAS to strengthen revenue administration management and governance.
  - Financial sector CD: minimize systemic risks and address emerging areas such as cybercrime.
  - Statistics CD: broaden debt coverage beyond government perimeter; improve national account statistics (next GDP rebasing, enhance annual and quarterly national accounts, and index of industrial production); improve price statistics including expanding the producer price index coverage.

*International Monetary Fund (IMF) — Ghana: selected excerpts from the source PDF.*

### 4.      However, the COVID-19 pandemic has created additional challenges to CD delivery.

### 1ghaea2021001 - 4.      However, the COVID-19 pandemic has created additional challenges to CD delivery

### COVID-19 impact on Capacity Development (CD) delivery
- For the foreseeable future, CD would be delivered remotely, making its effectiveness more uncertain and subject to a reliable internet access.
- Beneficiary institutions have adopted new working modalities to address COVID-19 and/or may be focusing on addressing the crisis, both factors may not favor optimal absorption of CD.
- CD delivery has been phased accordingly.

### FY21 Top Priorities and Objectives (Capacity Development)
- Public Financial Management
  - Strengthen budget credibility and cash management by mid-2021, including by reinforcing the governance measures around the use of COVID-19 emergency funds.
- Debt transparency and reporting
  - Review progress in implementing institutional sectorization of public sector entities and support the authorities in improving coverage of public debt beyond the perimeter of government.
- Tax Policy
  - Assess existing tax instruments performance.
  - Recommend new tax instruments.
  - Adopt a tax reform strategy by end 2021.
  - Improve managerial capacity of fiscal reforms.
  - Review the weaknesses in extractives taxation regime.
  - Adopt the FARI model to improve revenue forecasting.
- Revenue Administration
  - Increase compliance rate by end 2021.
  - Increase the tax and post clearance audits effectiveness (revenue collected per audit by end 2021).
  - Increase the number of trainings by end 2022.
- Systemic Risk Analysis
  - Support the FSC’s work by enhancing analytical capacity for systemic risk monitoring, mitigation and reporting.
- Financial Supervision and Regulation
  - Strengthen supervisory practices across all agencies, notably in risk-based supervision.
  - Complete regulatory reforms.

### Fund Relations — Key Facts and Financial Positions (as of May 31, 2021)
- Membership Status: Joined: September 20, 1957, Article VIII.
- General Resources Account:
  - Quota: 738.00 SDR Million 100.00 %Quota
  - IMF's Holdings of Currency (Holdings Rate): 645.61 SDR Million 87.48 %Quota
  - Reserve Tranche Position: 92.46 SDR Million 12.53 %Quota
- SDR Department:
  - Net cumulative allocation: 353.87 SDR Million 100.00 %Allocation
  - Holdings: 35.70 SDR Million 10.09 %Allocation
- Outstanding Purchases and Loans:
  - RCF Loans: 738.00 SDR Million 100.00 %Quota
  - ECF Arrangements: 692.91 SDR Million 93.89 %Quota
- Latest Financial Commitments — Arrangements (selected):
  - ECF Apr 03, 2015 – Mar 29, 2019: Amount Approved 664.20 SDR Million; Amount Drawn 664.20 SDR Million
  - ECF Jul 15, 2009 – Jul 23, 2012: Amount Approved 387.45 SDR Million; Amount Drawn 387.45 SDR Million
  - ECF May 09, 2003 – Oct 31, 2006: Amount Approved 184.50 SDR Million; Amount Drawn 184.50 SDR Million
- Outright Loans:
  - RCF Apr 13, 2020 – Apr 16, 2020: Amount Approved 738.00 SDR Million; Amount Drawn 738.00 SDR Million
- Projected Payments to Fund (SDR Million; based on existing use of resources and present holdings of SDRs):
  - Principal forthcoming: 2021 54.70; 2022 90.25; 2023 92.99; 2024 119.56; 2025 198.34
  - Charges/Interest forthcoming: 2021 0.08; 2022 0.17; 2023 0.17; 2024 0.17; 2025 0.16
  - Total forthcoming: 2021 54.78; 2022 90.41; 2023 93.15; 2024 119.72; 2025 198.50

### Debt Relief and HIPC/MDRI Implementation
- HIPC Enhanced Framework:
  - Decision point date: Feb 2002
  - Assistance committed by all creditors (US$ Million): 2,186.00
  - Of which: IMF assistance (US$ million): 112.10 (SDR equivalent in millions) 90.05
  - Completion point date: Jul 2004
  - Disbursement of IMF assistance (SDR Million):
    - Assistance disbursed to the member: 90.05
    - Interim assistance: 25.06
    - Completion point balance: 64.99
    - Additional disbursement of interest income: 4.25
    - Total disbursements: 94.30
- MDRI-eligible debt (SDR Million): 265.39
  - Financed by: MDRI Trust 220.04; Remaining HIPC resources 45.35
  - Delivery Date: January 2006; GRA N/A; PRGT 265.39; Total 265.39

### Safeguards Assessment (June 2021)
- Concluded that the Bank of Ghana (BOG)’s safeguards framework has seen mixed progress.
- Strengthened elements:
  - Steps to ensure continuation of high-quality external audits by independent firms.
  - Transition to full compliance with International Financial Reporting Standards (IFRS).
  - Improved operational control environment including a new framework for liquidity provision, modernization of banking and cash operations, and advancement of the risk-management function.
  - Internal audit continued to provide assurances on governance and control systems.
- Vulnerabilities and concerns:
  - The central bank has been operating without a Board, which was dissolved in early 2021.
  - Significant vulnerabilities remain in the legal framework despite the 2016 amendment to the BOG Act, including with respect to limits on monetary financing and claims on the government that have increased in 2020.

### Exchange Rate Arrangement and Market Data
- De jure exchange rate arrangement: “floating”.
- On June 15, 2021, the average exchange rate for transactions in the interbank market was GHc 5.7514 per U.S. dollar.
- Ghana currently maintains one exchange restriction and a multiple currency practice (MCP) subject to Fund approval (described in the source).

### Article IV, FSAP, and Resident Representation
- 2019 Article IV consultation discussions held in Accra during September 30 to October 11, 2019; staff report (Country Report No. 19/367) discussed by the Executive Board on December 6, 2019.
- FSAP participation: Ghana participated in the FSAP in 2011; FSSA issued in 2011; FSAP update presented May 2011.
- Resident Representative: The Fund has had a Resident Representative office in Accra since June 1985. The current resident representative, Mr. Albert Touna Mama, assumed the post in September 2018.

### Statistical Issues — Data Adequacy and Key Data Initiatives (as of June 18, 2021)
- General: Data provision broadly adequate for surveillance, though shortcomings remain in quality and timeliness; notable deficiencies in dissemination of fiscal data, which are released with delays.
- National Accounts:
  - Ghana compiles annual and quarterly GDP by production at current and constant (2013) prices following a rebasing.
  - The GSS finalized the rebased GDP estimates with base year 2013 in April 2021.
- Price Statistics:
  - CPI updated in September 2019 using 2016-17 household expenditures and taking 2018 as the index reference period.
  - GSS, with AFW2 support, is in the final stages of updating PPI weights using 2014 values of production; updated PPI index expected to be disseminated by the end of 2021.
  - As part of the PPI update, GSS will update IIP and develop ISP and ICP; ISP initial coverage driven by availability of PPI data for selected services activities.
- Labor statistics: Scarcity remains, although the 2015 Labor Force Survey provides information; Ministry of Employment has received TA from UNDP and ILO.
- Government Finance Statistics (GFS):
  - Quality and timeliness need improvement; monthly government accounts published with significant delays.
  - A GFS inter-agency committee was established to reach understandings on consistent data coverage and sources.
  - Implementation of the Treasury Single Account and rollout of GIFMIS can help improve fiscal reporting.
- Monetary and Financial Statistics (MFS):
  - BOG has made progress implementing MFS recommendations; expanded coverage to rural banks, savings and loans companies, and credit unions, and to other financial corporations, but source data need further improvement.
  - Ghana has not reported FAS data since 2018.
- Financial Sector Surveillance:
  - BOG reports the 12 core FSIs and 7 of the 13 encouraged FSIs for deposit takers quarterly with a lag of more than one quarter for posting.
- Balance of Payments and IIP:
  - BPO in BOG Research Department compiles BOP and IIP.
  - Progress made via enterprise surveys (FALS); challenges remain with timeliness.
  - Next steps include implementing a small timely sample quarterly survey of cross-border capital and improving ITRS reporting to serve as a broad indicator and data source.
- External and Domestic Debt Statistics:
  - External debt recording and payment responsibilities divided among MOFEP/ADMU, CAGD, and BOG; authorities should clearly identify government subsectors and prepare a clear classification of financing, outstanding debt, and guarantees.
- Trade Statistics:
  - GSS not publishing timely monthly trade statistics though CEPS has data; recommended collaboration to process customs data within six weeks and to improve trade volume and unit value data for major commodities (gold, cocoa, oil).

### Table of Common Indicators Required for Surveillance (As of June 18, 2021) — Selected entries (Latest observation / Date received / Frequency of Data / Frequency of Reporting / Frequency of Publication)
- Exchange Rates: Jun 2021 / Jun 2021 / D / D / D
- International Reserve Assets and Reserve Liabilities of the Monetary Authorities: Apr 2021 / Jun 2021 / M / M / M
- Reserve/Base Money: Apr 2021 / Jun 2021 / M / M / M
- Broad Money: Apr 2021 / Jun 2021 / M / M / M
- Central Bank Balance Sheet: Apr 2021 / Jun 2021 / M / M / M
- Consolidated Balance Sheet of the Banking System: Apr 2021 / Jun 2021 / M / M / M
- Interest Rates: Apr 2021 / Jun 2021 / M / M / M
- Consumer Price Index: May 2021 / May 2021 / M / M / M
- Revenue, Expenditure, Balance and Composition of Financing – Central Government: Mar 2021 / Apr 2021 / M / M / I
- Stocks of Central Government and Central Government-Guaranteed Debt: Dec 2020 / Apr 2021 / M / Q / A
- External Current Account Balance: Mar 2021 / Apr 2021 / Q / Q / Q
- Exports and Imports of Goods and Services: Mar 2021 / Apr 2021 / Q / Q / Q
- GDP/GNP: 2020 / Apr 2021 / Q/A / Q/A / Q/A
- Gross External Debt: Mar 2021 / Apr 2021 / M / I / A
- International Investment Position: 2019 / Apr 2021 / A / A / A

### Debt Sustainability Analysis — Key Conclusions (Joint Bank-Fund, July 1, 2021)
- Risk ratings:
  - Risk of external debt distress: High
  - Overall risk of debt distress: High
- Drivers and vulnerabilities:
  - External and overall debt are at high risk of debt distress due to breaches of PV of external debt to GDP until 2029, and breaches for debt service to exports and debt service to revenues over the full horizon.
  - The PV of external PPG debt-to-exports ratio remains below threshold under the baseline but would exceed the threshold under an export shock for most of the forecast horizon.
  - A growth shock would send overall public debt on an ever-increasing path.
- Policy implications:
  - Public debt is sustainable provided the authorities’ medium-term consolidation plan (reflected in the baseline) is rigorously and credibly implemented to improve the primary balance, put debt on a declining trajectory, and ensure continued market access.
  - Inadequate implementation, growth slowdowns, and exogenous shocks (including longer exit from the pandemic, worsening global risk sentiment, and adverse terms of trade movements) pose significant risks.
  - A deeper consolidation effort is crucial to make sustainability more robust to setbacks in policy implementation and exogenous shocks.
  - Widening the debt perimeter and improving transparency can reduce risks of contingent liabilities and “hidden debt”, particularly in SOEs and off-budget operations.
  - Debt management aimed at reducing refinancing risks should complement fiscal efforts.

*Prepared by the staffs of the International Development Association (IDA) and International Monetary Fund (IMF), July 1, 2021.*

### 1.      The Debt Sustainability Analysis (DSA) mainly covers public and publicly

### 1. The Debt Sustainability Analysis (DSA) mainly covers public and publicly

### Coverage and off-balance-sheet liabilities
- DSA coverage: public and publicly guaranteed (PPG) debt of the central government, plus guarantees to other entities in the public and private sector including state-owned enterprises (SOEs) and certain non-guaranteed SOE debt.
- Included notable non-guaranteed or quasi-public debts: Energy Sector Levy Act (ESLA) debt; Ghana Educational Trust Fund (GETFund/Daakye) debt; debt related to the bauxite mining project with Sinohydro.
- Exclusions and omitted items:
  - Cocobod (a large SOE operating on non-commercial terms, engaging in quasi-fiscal activity) is excluded; inclusion would have added 2.5 percent of GDP to public debt as of end-2020.
  - Debts to independent power producers (IPPs) and gas producers are excluded (currently being reconciled).
  - Stock of domestic arrears accumulated in 2020 is excluded; preliminarily estimated at 2.1 percent of GDP (yet to be audited and reconciled).
- Debt outstanding at end-2020 for ESLA and GETFund/Daakye SPVs: 2.0 and 0.4 percent of GDP, respectively.
- Financial sector restructuring costs estimated at 6.8 percent of GDP between 2017 and 2020, with further costs expected in 2021.
- Energy sector costs to the budget: 2.7 percent of GDP in 2020; projected 2.7 percent of GDP in 2021; projected 1 percent of GDP annually from 2022 onwards.

### Contingent liabilities and stress testing framework
- Contingent fiscal liability shocks modeled separately in stress tests:
  - 5 percent of GDP from further financial sector costs.
  - 3 percent of GDP from non-guaranteed SOE debt.
  - PPP shock: 35 percent of outstanding PPP arrangements become part of public debt.
- Standard shock scenarios included: GDP growth, primary balance, exports, FDI, exchange rate, and a combined shock at half strength.
  - Most shocks calibrated at 1 standard deviation from historical average.
  - Exchange rate shock: one-off 30 percent depreciation in 2022.
- Tailored tests:
  - Commodity prices: fuel prices fall 35 percent; non-fuel commodity prices fall 11 percent.
  - Market financing shock: 400bps increase in cost of borrowing for three years and a shortening of average maturities on external debt by 2 years from current average of 12.9 years.

### Debt profile and key statistics (end-2020)
- Public debt: USD 52.5 billion — 78.9 percent of GDP.
- External public debt: USD 29.8 billion — 44.7 percent of GDP.
  - Multilateral: USD 8.3 billion — 12.4 percent of GDP.
    - IMF: USD 2.1 billion — 3.2 percent of GDP.
  - Bilateral: USD 5.0 billion — 7.6 percent of GDP.
    - Paris Club: USD 2.4 billion — 3.6 percent of GDP.
    - Non-Paris Club: USD 2.7 billion — 4.0 percent of GDP.
      - China: USD 1.9 billion — 2.8 percent of GDP.
  - Commercial: USD 16.5 billion — 24.7 percent of GDP.
    - Eurobond: USD 10.2 billion — 15.3 percent of GDP.
    - Nonresidents: USD 4.8 billion — 7.2 percent of GDP.
- Domestic public debt: USD 22.8 billion — 34.2 percent of GDP.
  - Marketable: USD 18.1 billion — 27.2 percent of GDP.
    - Banks: USD 9.7 billion — 14.6 percent of GDP.
    - Nonbanks: USD 8.4 billion — 12.6 percent of GDP.
  - Nonmarketable: USD 4.6 billion — 7.0 percent of GDP.
- Memo: Debt excl. ESLA, Daakye: USD 51.0 billion — 76.6 percent of GDP.
- Liquidity and debt-service indicators:
  - Local currency debt rose from 30.7 percent of GDP at end-2019 to 40.8 percent of GDP at end-2020.
  - Average time to maturity of local currency debt fell from 5.8 to 4.8 years.
  - Average interest rates on local debt increased from 17.1 to 17.2 percent.
  - Debt service (including amortization) to revenues: 99 percent in 2019 → 130 percent in 2020.
  - Gross financing needs (GFN): 15.5 percent of GDP in 2019 → 25.6 percent of GDP in 2020.
  - Local currency debt expected to account for 78 percent of debt service burden in 2021.
  - Spreads stabilized around 620bps (above benchmark).

### Macroeconomic assumptions (Box 1)
- Real GDP growth: rebound to 4.7 percent in 2021; average 5.2 percent over the medium term (driven mainly by oil production). Non-oil growth: 6.4 percent in 2021; around 5 percent on average from 2022 onwards.
- Inflation and exchange rate:
  - Inflation: 7.5 percent (y-o-y) in May; expected to rise to around 9.6 percent by end-2021; gradually stabilize around the 8 percent target. Headline inflation expected to drop over the medium term to reach 6 percent.
  - Cedi depreciation: 3.9 percent against the dollar in 2020.
- Government balance:
  - Overall fiscal deficit expected to reach 13.9 percent of GDP in 2021.
  - Budget deficit expected to fall below 10 percent of GDP on average over the medium term.
- Current account balance:
  - Expected to widen in medium term, reaching 4.8 percent of GDP in 2024; decline to long-term average around 3 percent of GDP as oil production expands.
- Financing flows:
  - FDI inflows fell below 2 percent of GDP in 2020; expected to rebound to about 5 percent of GDP.
  - Eurobond issuance projected to average US$3 billion annually for the next five years (a potential SDR allocation is not included).

- Tabulated medium/long-term projections (selected):
  - 2021-2026 Real GDP (%): 5.2
  - 2027-2040 Real GDP (%): 4.5
  - Inflation GDP Deflator: 7.6 (2021-2026); 6.2 (2027-2040)
  - Nominal GDP (Million US$): 89,352 (2021-2026); 181,713 (2027-2040)
  - Average real interest rate on domestic debt: 9.1 (2021-2026); 5.4 (2027-2040)
  - Average real interest rate on foreign debt: 4.0 (2021-2026); 5.1 (2027-2040)
  - Revenue and Grants (% of GDP): 15.1 (2021-2026); 16.4 (2027-2040)
  - Grants (Percent of GDP): 0.2 (2021-2026); 0.0 (2027-2040)
  - Primary expenditure (% of GDP): 15.9 (2021-2026); 14.3 (2027-2040)
  - Primary balance (% of GDP): -0.8 (2021-2026); 2.3 (2027-2040)
  - Exports of G&S (percent of GDP growth): 6.5 (2021-2026); 6.7 (2027-2040)
  - Non-interest current account balance (% of GDP): -0.7 (2021-2026); -0.2 (2027-2040)

### Realism of projections and fiscal consolidation
- Historical projection bias: staff projections tended to overestimate fiscal adjustment and thus underestimate overall debt growth, while more accurately estimating external debt.
  - Compared to the five-year projection in the 2016 DSA, total public debt exceeded estimates by 37 percentage points of GDP due to higher than expected fiscal deficits and contingent liabilities.
  - The five year gap between actual and forecast debt level increased by 7.6 percentage points of GDP in 2020.
- Baseline fiscal consolidation:
  - Projected primary balance adjustment of 9 percent of GDP over four years is described as feasible but ambitious.
  - Outlook assumes return to pre-pandemic primary government deficit of 1.4 percent of GDP by 2022 and a 2.7 percent of GDP adjustment over the following three years.
  - Consolidation falls within the top quartile for peers.

### Country classification and external DSA findings
- Debt carrying capacity: Ghana has a medium debt carrying capacity (unchanged from last DSA vintage).
- CI Score components and contributions (selected values preserved):
  - CPIA coefficient: 0.385; 10-year average value: 3.563; contribution: 1.375 (50%).
  - Real growth rate coefficient: 2.7; 10-year average: 1.95; contribution: 0.145 (5%).
  - Import coverage of reserves coefficient: 4.05; 10-year average: 2.25; contribution: 1.03 (37%).
  - World economic growth coefficient: 13.5; 10-year average: 0.20; contribution: 0.421 (15%).
  - CI Score: 2.77 — CI rating: Medium.
- Applicable external debt burden thresholds:
  - PV of debt in % of GDP benchmark: 55
  - Exports threshold: 180
  - GDP threshold: 40
  - Debt service in % of exports threshold: 15
  - Debt service in % of revenue threshold: 18
- Under the baseline, three external debt ratios exceed thresholds, two of which over the full horizon.
  - External PPG debt-to-GDP expected to remain above threshold until 2029.
  - Debt service-to-exports and debt service-to-revenues ratios exceed thresholds throughout the forecast horizon.
  - Stress test with largest impact on external debt service-to-revenues: market access shock.
  - Export shock scenario: average decline in exports of 15 percent in 2022 and 2023 (=1 s.d. applied to historical average) against 4 percent growth in the baseline.
- Market access and financing:
  - Recent Eurobond series in March 2021: US$3 billion issued (out of target US$3-5 billion), weighted average maturity 11 years at 8 percent. 2020 issue had weighted average maturity 17 years at 7.5 percent.
  - Domestic absorption constraints: government securities account for over 40 percent of banking sector assets.
  - Continued dependence on market access exposes Ghana to sudden changes in market sentiment.

### Public DSA results and vulnerabilities
- PV of public debt: 75.3 percent of GDP in 2020 — expected to remain above the 55 percent benchmark throughout forecast horizon.
- Main drivers of increase since last DSA: pandemic-related revenue and expenditure shocks, fiscal slippages, realization of contingent liabilities in finance and energy sectors.
- Gross financing needs: 25.6 percent of GDP in 2020 — expected to remain above the 14 percent benchmark throughout forecast horizon.
- Debt service (including amortization) to revenues: exceeded 129 percent in 2020; projected to peak at 155 percent in 2026 before declining slowly.
- Most severe shock for public debt indicators: growth shock (fall of one standard deviation).
- Growth and commodity price shocks have the strongest impact on debt service-to-revenue ratio.

### Conclusions and policy recommendations
- Core conclusion: Debt sustainability can only be ensured by an aggressive and credible fiscal consolidation plan.
  - Without decisive consolidation, public debt would not be sustainable if it continues to grow at current trends.
  - Rigorous implementation of the fiscal consolidation in staff’s baseline, supported by continued market access, would ensure debt sustainability only narrowly.
- Risks to outlook: inadequate implementation of consolidation, growth slowdowns, delayed exit from pandemic, worsening global risk sentiment, adverse terms of trade — all pose significant liquidity and solvency risks.
- Recommended actions:
  - A deeper consolidation effort based on well-articulated measures is urgently needed to create a stronger inflection in the debt trajectory, strengthen credibility, and create margins for policy implementation.
  - Broaden public debt perimeter and improve debt transparency to prevent debt surprises and provide a more accurate picture of debt sustainability.
    - Include energy sector debts to the private sector (e.g., debts related to IPPs and gas projects) and debts of SOEs that engage in quasi-fiscal activities (e.g., Cocobod).
  - Complement fiscal adjustment with improved debt management and liability management operations.

*Source: IMF staff DSA chapter (Ghana) — content as provided in the source PDF.*

### 18.      The authorities underscored their commitment to the fiscal consolidation agenda

### 18.      The authorities underscored their commitment to the fiscal consolidation agenda

### Authorities' stance and debt management measures
- The authorities emphasized commitment to the fiscal consolidation agenda and improved debt management to guarantee macroeconomic stability.
- They argued a comprehensive view of debt vulnerabilities should be based on a forward-looking assessment.
- They expressed confidence that rapid growth, together with the government’s strong commitment to macroeconomic stability, ongoing structural reforms and track record with capital markets, will allow Ghana to address its fiscal and debt vulnerabilities.
- Advancements in debt management highlighted:
  - Gradually lengthening maturities.
  - Using LMOs to retire expensive debt.
  - Attracting new investors with longer time horizon, including pension funds and insurers.
- On debt classification:
  - Authorities agreed with not including expenditure arrears in public debt because they were yet to be audited and the medium-term budget framework includes an above-the-line arrears clearance plan.
  - Authorities disagreed with including Cocobod debt in public sector debt, viewing Cocobod as a primarily commercial operation that is not loss making.

### External Debt — baseline indicators and projections (selected items from External DSA)
- External debt (nominal) (in percent of GDP) by year:
  - 2019: 43.6
  - 2020: 49.5
  - 2021: 49.3
  - 2022: 50.1
  - 2023: 51.1
  - 2024: 52.7
  - 2025: 52.3
  - 2026: 52.0
  - 2031: 45.7
  - 2041: 32.2
- Of which: public and publicly guaranteed (PPG) external debt (percent of GDP):
  - 2019: 39.0
  - 2020: 44.7
  - 2021: 44.2
  - 2022: 44.8
  - 2023: 45.4
  - 2024: 46.8
  - 2025: 46.1
  - 2026: 45.6
  - 2031: 37.9
  - 2041: 22.2
- Change in external debt (percent of GDP):
  - 2019: 2.9
  - 2020: 6.0
  - 2021: -0.2
  - 2022: 0.8
  - 2023: 0.9
  - 2024: 1.6
  - 2025: -0.4
  - 2026: -0.2
  - 2031: -1.2
  - 2041: -3.2
- Identified net debt-creating flows (percent of GDP):
  - 2019: -3.8
  - 2020: 0.5
  - 2021: -3.3
  - 2022: -2.8
  - 2023: -1.7
  - 2024: -2.0
  - 2025: -3.7
  - 2026: -3.4
  - 2031: -2.9
  - 2041: -4.5
- Non-interest current account deficit (percent of GDP):
  - 2019: 0.3
  - 2020: 0.4
  - 2021: -0.6
  - 2022: 0.8
  - 2023: 1.6
  - 2024: 1.9
  - 2025: 1.0
  - 2026: 1.1
  - 2031: 0.0
  - 2041: -1.9
- Exports (percent of GDP):
  - 2019: 37.4
  - 2020: 32.2
  - 2021: 32.9
  - 2022: 31.7
  - 2023: 30.2
  - 2024: 29.3
  - 2025: 29.6
  - 2026: 29.6
  - 2031: 28.2
  - 2041: 28.7
- Imports (percent of GDP):
  - 2019: 39.4
  - 2020: 35.8
  - 2021: 34.7
  - 2022: 34.7
  - 2023: 34.1
  - 2024: 33.4
  - 2025: 32.5
  - 2026: 32.3
  - 2031: 30.1
  - 2041: 30.2
- Net FDI (negative = inflow) (percent of GDP):
  - 2019: -4.8
  - 2020: -1.9
  - 2021: -3.4
  - 2022: -3.5
  - 2023: -4.0
  - 2024: -4.5
  - 2025: -5.0
  - 2026: -5.0
  - 2031: -4.0
  - 2041: -3.3
- Endogenous debt dynamics (percent of GDP):
  - 2019: 0.7
  - 2020: 2.1
  - 2021: 0.7
  - 2022: -0.1
  - 2023: 0.7
  - 2024: 0.6
  - 2025: 0.2
  - 2026: 0.6
  - 2031: 1.1
  - 2041: 0.6
- Contribution from nominal interest rate (percent of GDP):
  - 2019: 2.4
  - 2020: 2.7
  - 2021: 2.9
  - 2022: 2.7
  - 2023: 2.8
  - 2024: 3.0
  - 2025: 3.1
  - 2026: 3.1
  - 2031: 2.8
  - 2041: 2.2
- Contribution from real GDP growth (percent of GDP):
  - 2019: -2.6
  - 2020: -0.2
  - 2021: -2.1
  - 2022: -2.8
  - 2023: -2.2
  - 2024: -2.4
  - 2025: -2.8
  - 2026: -2.5
  - 2031: -1.7
  - 2041: -1.6
- Residual (percent of GDP):
  - 2019: 6.7
  - 2020: 5.4
  - 2021: 3.1
  - 2022: 3.6
  - 2023: 2.6
  - 2024: 3.6
  - 2025: 3.3
  - 2026: 3.1
  - 2031: 1.7
  - 2041: 1.4
- Sustainability indicators (selected):
  - PV of PPG external debt-to-GDP ratio (percent): 40.0; 39.9; 40.9; 41.8; 43.4; 43.0; 42.8; 36.2; 21.5
  - PV of PPG external debt-to-exports ratio (percent): 124.0; 121.1; 128.8; 138.4; 148.4; 145.6; 144.5; 128.2; 75.0
  - PPG debt service-to-exports ratio (percent): 13.2; 21.1; 19.4; 14.8; 18.3; 17.9; 21.8; 21.8; 17.3; 16.8
  - PPG debt service-to-revenue ratio (percent): 36.1; 55.5; 44.1; 32.2; 37.5; 34.7; 42.4; 41.8; 28.6; 28.4
- Gross external financing need (Million of U.S. dollars):
  - 2019: 1082.6
  - 2020: 4453.2
  - 2021: 2679.5
  - 2022: 2744.2
  - 2023: 3984.6
  - 2024: 3821.5
  - 2025: 4040.0
  - 2026: 4448.4
  - 2031: 4295.8
  - 2041: 6275.6

### Key macroeconomic assumptions (external DSA)
- Real GDP growth (percent):
  - 2019: 6.5
  - 2020: 0.4
  - 2021: 4.7
  - 2022: 6.2
  - 2023: 4.7
  - 2024: 5.0
  - 2025: 5.8
  - 2026: 5.2
  - 2031: 3.9
  - 2041: 4.9
  - Average (projection column): 5.9; 4.8 (two final values listed)
- GDP deflator in US dollar terms (change in percent):
  - 2019: -4.6
  - 2020: -0.2
  - 2021: 5.2
  - 2022: 2.3
  - 2023: 2.2
  - 2024: 2.1
  - 2025: 1.5
  - 2026: 2.0
  - 2031: 2.6
  - 2041: 2.2
- Effective interest rate (percent):
  - 2019: 6.0
  - 2020: 6.1
  - 2021: 6.4
  - 2022: 5.9
  - 2023: 6.0
  - 2024: 6.2
  - 2025: 6.3
  - 2026: 6.3
  - 2031: 6.4
  - 2041: 6.8
- Growth of exports of G&S (US dollar terms, in percent):
  - 2019: 13.7
  - 2020: 13.7
  - 2021: 12.5
  - 2022: 4.8
  - 2023: 1.9
  - 2024: 3.7
  - 2025: 8.5
  - 2026: 7.5
  - 2031: 5.0
  - 2041: 8.9
- Growth of imports of G&S (US dollar terms, in percent):
  - 2019: 15.9
  - 2020: -8.7
  - 2021: 6.6
  - 2022: 8.8
  - 2023: 5.1
  - 2024: 5.0
  - 2025: 4.4
  - 2026: 6.7
  - 2031: 5.1
  - 2041: 7.8
- Grant element of new public sector borrowing (in percent) (selected):
  - 2021 onward: 1.5; 2.0; 2.4; 2.3; 2.4; 1.7; 2.4; 0.0; ...; 2.3 (values shown with ellipses in table)
- Government revenues (excluding grants, percent of GDP):
  - 2019: 13.7
  - 2020: 12.3
  - 2021: 14.5
  - 2022: 14.6
  - 2023: 14.7
  - 2024: 15.1
  - 2025: 15.2
  - 2026: 15.5
  - 2031: 17.1
  - 2041: 16.9
  - Average/projection: 12.9; 15.7 (final two values in the block)
- Aid flows (Million of US dollars):
  - 2019: 189.0
  - 2020: 435.3
  - 2021: 325.5
  - 2022: 273.1
  - 2023: 230.8
  - 2024: 123.4
  - 2025: 98.7
  - 2026: 79.0
  - 2031: 25.9
  - 2041: 2.8
- Nominal GDP (Million of US dollars) (selected years shown):
  - 2019: 68,353
  - 2021: 68,498
  - 2022: 75,487
  - 2023: 82,018
  - 2024: 87,736
  - 2025: 94,045
  - 2026: 101,028
  - 2031: 108,370
  - 2041: 150,636; 297,224 (two values listed in block)
- Memorandum items:
  - PV of external debt (percent of GDP): 44.8; 45.0; 46.3; 47.5; 49.3; 49.2; 49.3; 44.0; 31.5
  - In percent of exports: 138.9; 136.5; 145.7; 157.0; 168.6; 166.5; 166.3; 155.8; 109.9
  - Total external debt service-to-exports ratio (percent): 16.2; 24.8; 23.2; 19.0; 22.8; 22.8; 26.9; 27.2; 24.1; 25.4
  - PV of PPG external debt (in Million of US dollars) (selected): 27,381; 30,093; 33,545; 36,713; 40,836; 43,472; 46,390; 54,537; 63,883
  - (PVt-PVt-1)/GDPt-1 (in percent): 4.0; 4.6; 3.9; 4.7; 2.8; 2.9; 1.1; -1.5

### Public Sector Debt — baseline indicators and projections (selected items from Public DSA)
- Public sector debt (percent of GDP) (coverage: central government, central bank, government-guaranteed debt):
  - 2018: 57.9
  - 2019: 62.9
  - 2020: 78.9
  - 2021: 83.5
  - 2022: 84.9
  - 2023: 86.4
  - 2024: 87.4
  - 2025: 87.0
  - 2026: 86.5
  - 2031: 81.2
  - 2041: 58.9; 52.3 (values shown)
- Of which: external debt (percent of GDP):
  - 2018: 36.4
  - 2019: 39.0
  - 2020: 44.7
  - 2021: 44.2
  - 2022: 44.8
  - 2023: 45.4
  - 2024: 46.8
  - 2025: 46.1
  - 2026: 45.6
  - 2031: 37.9
  - 2041: 22.2; 32.8; 43.4 (values listed)
- Change in public sector debt (percent of GDP):
  - 2018: 0.6
  - 2019: 5.0
  - 2020: 16.0
  - 2021: 4.6
  - 2022: 1.3
  - 2023: 1.5
  - 2024: 1.0
  - 2025: -0.5
  - 2026: -0.5
  - 2031: -1.2
  - 2041: -2.2
- Identified debt-creating flows (percent of GDP):
  - 2018: 0.9
  - 2019: 3.9
  - 2020: 12.6
  - 2021: 5.4
  - 2022: 2.0
  - 2023: 2.3
  - 2024: 1.7
  - 2025: 0.3
  - 2026: 0.3
  - 2031: -0.9
  - 2041: -2.0
- Primary deficit (percent of GDP):
  - 2018: 1.4
  - 2019: 1.7
  - 2020: 8.8
  - 2021: 5.9
  - 2022: 1.4
  - 2023: 0.2
  - 2024: -0.3
  - 2025: -1.3
  - 2026: -1.4
  - 2031: -2.1
  - 2041: -2.4; 2.7; -0.5 (multiple values shown in block)
- Revenue and grants (percent of GDP):
  - 2018: 14.1
  - 2019: 14.0
  - 2020: 12.9
  - 2021: 14.9
  - 2022: 15.0
  - 2023: 15.0
  - 2024: 15.2
  - 2025: 15.3
  - 2026: 15.5
  - 2031: 17.1
  - 2041: 16.9
- Primary (noninterest) expenditure (percent of GDP):
  - 2018: 15.5
  - 2019: 15.7
  - 2020: 21.8
  - 2021: 20.8
  - 2022: 16.4
  - 2023: 15.2
  - 2024: 14.9
  - 2025: 14.0
  - 2026: 14.2
  - 2031: 15.0
  - 2041: 14.5; 16.2; 15.3 (multiple values shown)
- Automatic debt dynamics (percent of GDP):
  - 2018: 0.1
  - 2019: 2.2
  - 2020: 3.7
  - 2021: -0.5
  - 2022: 0.6
  - 2023: 2.1
  - 2024: 2.1
  - 2025: 1.6
  - 2026: 1.6
  - 2031: 1.2
  - 2041: 0.4
- Contribution from interest rate/growth differential (percent of GDP):
  - 2018: -0.3
  - 2019: 0.1
  - 2020: 4.3
  - 2021: 0.3
  - 2022: 0.5
  - 2023: 2.0
  - 2024: 2.0
  - 2025: 1.4
  - 2026: 1.6
  - 2031: 1.3
  - 2041: 0.4
  - Of which: contribution from average real interest rate (percent):
    - 2018: 3.1
    - 2019: 3.6
    - 2020: 4.5
    - 2021: 3.8
    - 2022: 5.4
    - 2023: 5.8
    - 2024: 6.1
    - 2025: 6.2
    - 2026: 5.8
    - 2031: 4.4
    - 2041: 3.2
  - Of which: contribution from real GDP growth (percent):
    - 2018: -3.3
    - 2019: -3.5
    - 2020: -0.3
    - 2021: -3.6
    - 2022: -4.9
    - 2023: -3.8
    - 2024: -4.1
    - 2025: -4.8
    - 2026: -4.3
    - 2031: -3.1
    - 2041: -2.8
- Residual (percent of GDP):
  - 2018: -0.3
  - 2019: 1.1
  - 2020: 3.4
  - 2021: -1.6
  - 2022: -0.6
  - 2023: -0.7
  - 2024: -0.7
  - 2025: -0.6
  - 2026: -0.8
  - 2031: -0.5
  - 2041: -0.2; 2.9; -0.7 (multiple values)
- Sustainability indicators (selected):
  - PV of public debt-to-GDP ratio (percent): 75.3; 80.3; 82.0; 83.8; 85.1; 84.9; 84.6; 80.1; 58.5 (values across years)
  - PV of public debt-to-revenue and grants ratio (percent): 582.8; 538.1; 548.0; 559.2; 559.1; 555.1; 544.2; 467.8; 346.0
  - Debt service-to-revenue and grants ratio (percent): 90.1; 99.3; 129.8; 123.3; 120.3; 150.2; 145.6; 153.7; 154.7; 126.5; 109.0
  - Gross financing need (percent of GDP): 13.5; 15.6; 25.6; 24.3; 19.4; 22.7; 21.8; 22.2; 22.7; 19.6; 16.0

### Key macro-fiscal assumptions (public DSA)
- Real GDP growth (percent):
  - 2018: 6.2
  - 2019: 6.5
  - 2020: 0.4
  - 2021: 4.7
  - 2022: 6.2
  - 2023: 4.7
  - 2024: 5.0
  - 2025: 5.8
  - 2026: 5.2
  - 2031: 3.9
  - Average/projection: 4.9; 5.9; 4.8 (values shown)
- Average nominal interest rate on external debt (percent):
  - 2018: 6.1
  - 2019: 6.4
  - 2020: 6.7
  - 2021: 6.7
  - 2022: 6.1
  - 2023: 6.3
  - 2024: 6.5
  - 2025: 6.6
  - 2026: 6.7
  - 2031: 6.8
  - Average/projection: 7.6; 4.9; 6.7 (values shown)
- Average real interest rate on domestic debt (percent):
  - 2018: 8.0
  - 2019: 8.6
  - 2020: 9.1
  - 2021: 6.7
  - 2022: 9.8
  - 2023: 9.9
  - 2024: 10.3
  - 2025: 10.4
  - 2026: 9.4
  - 2031: 6.2
  - Average/projection: 5.7; 7.0; 8.7 (values shown)
- Inflation rate (GDP deflator, percent): 10.6; 8.5; 7.1; 11.2; 7.7; 7.2; 6.9; 6.1; 6.4; 6.5; 6.0; 13.4; 7.0 (series across years)
- Growth of real primary spending (deflated by GDP deflator, percent) (selected):
  - 2018: 25.4
  - 2019: 8.1
  - 2020: 39.2
  - 2021: 0.2
  - 2022: -16.6
  - 2023: -2.8
  - 2024: 3.0
  - 2025: -0.5
  - 2026: 6.4
  - 2031: 6.9
  - Others: -5.7; 11.1; 1.6 (additional values)
- Primary deficit that stabilizes the debt-to-GDP ratio (percent):
  - 2018: 0.8
  - 2019: -3.3
  - 2020: -7.2
  - 2021: 1.3
  - 2022: 0.1
  - 2023: -1.3
  - 2024: -1.4
  - 2025: -0.8
  - 2026: -0.8
  - 2031: -0.8
  - 2041: -0.2; -3.2; -0.7 (multiple values)

### Stress tests, sensitivity analyses, and risk signals (high-level)
- Figure and table outputs present multiple stress-test results and sensitivity analyses for 2021-2031, including:
  - Alternative scenarios (e.g., key variables at historical averages).
  - Bound tests (Real GDP growth, Primary balance, Exports, Other flows, Depreciation, Combination).
  - Tailored tests (Combined contingent liabilities, Commodity price, Market Financing).
- Selected highlights from sensitivity tables (Table 3 and Table 4):
  - PV of debt-to-GDP ratio baseline values for 2021-2031: 40; 41; 42; 43; 43; 43; 41; 40; 39; 37; 36 (series shown in Table 3).
  - PV of debt-to-revenue ratio baseline values for 2021-2031: 121; 121; 129; 138; 148; 146; 145; 139; 134; 133; 131; 128 (series shown).
  - Debt service-to-revenue ratio baseline for 2021-2031: 19; 15; 18; 18; 22; 22; 19; 18; 18; 18; 17 (series shown across tables and figures).
  - Public debt PV-to-GDP baseline (Table 4): 80; 82; 84; 85; 85; 84; 84; 83; 82; 81; 80 (years 2021-2031).
  - Under stress tests, various scenarios yield breaches of thresholds for specific indicators (bold values in original tables indicate breaches).

### Drivers of debt dynamics and realism tools (figures summary)
- Figures present decomposition of debt dynamics into contributions from:
  - Nominal interest rate.
  - Real GDP growth.
  - Price and exchange rate changes.
  - Current account + FDI.
  - Primary deficit.
  - Residual/unexpected changes.
- Realism tools illustrate:
  - Contribution of government and private investment to real GDP growth.
  - Projected fiscal adjustments and possible real GDP growth paths under different fiscal multipliers.

*Sources: Country authorities; and staff estimates and projections.*

### 1990. The size of 3-year adjustment from program inception is found on the horizontal axis; the

### 1ghaea2021001 - 1990. The size of 3-year adjustment from program inception is found on the horizontal axis; the

### Fiscal Adjustment and Possible Growth Paths
- 3-Year Adjustment in Primary Balance (Percentage points of GDP) — distribution presented across adjustments from -4 .5 to 8.0 (axis labels preserved as in source): -4 .5 -4 .0 -3 .5 -3 .0 -2 .5 -2 .0 -1 .5 -1 .0 -0 .5 0. 00. 5 1. 01. 52. 02. 53. 03. 54. 04. 55. 05. 56. 06. 57. 07. 58. 0
- Projected 3-yr adjustment: 3-year PB adjustment greater than 2.5 percentage points of GDP in approx. top quartile.
- Multipliers shown in projections: Multiplier = 0.2; Multiplier = 0.4; Multiplier = 0.6; Multiplier = 0.8.

### Market-Financing Risk Indicators (Ghana)
- Figure notes:
  - 1/ Maximum gross financing needs (GFN) over 3-year baseline projection horizon.
  - 2/ EMBI spreads correspond to the latest available data.
  - Sources: Country authorities; and staff estimates and projections.
- Benchmarks and breaches:
  - Breach of benchmark: Yes
  - GFN Benchmarks: 14
  - EMBI: 570
  - Values: 24620
- Risk categories indicated:
  - Baseline, Market financing, Threshold
  - Potential heightened liquidity needs: High
- Historical and projected indicator series (axes preserved):
  - Time series points include years: 2015 2016 2017 2018 2019 2020 2021 2022 and 2017–2026 (projected)
  - Debt service-to-revenue ratio plotted for years 2021 2023 2025 2027 2029 2031 with axis 0 to 60.
  - PV of debt-to-exports ratio plotted for years 2021 2023 2025 2027 2029 2031 with axis 0 to 200.
  - PV of debt-to-GDP ratio plotted for years 2021 2023 2025 2027 2029 2031 with axis 0 to 60.
  - Debt service-to-exports ratio plotted for years 2021 2023 2025 2027 2029 2031 with axis 0 to 35.

### Statement by Mr. Hossein Mirshojaeian Hosseini, Executive Director for Ghana and Mr. Osei Yeboah, Advisor to Executive Director
- Appreciation for IMF support:
  - Timely disbursement of the Rapid Credit Facility in April 2020 provided critical budget support.
- Recovery outlook and program:
  - Authorities welcome staff appraisal and see recovery taking shape, anticipating a stronger and inclusive rebound.
  - Home-grown Ghana Covid-19 Alleviation and Revitalization of Enterprises Support (CARES ‘Obaatanpa’) program underway to strengthen recovery and address structural imbalances.
- COVID-19 context and health measures:
  - Infections and deaths: 97,729 and 8022, respectively as of early-July 2021.
  - As at early July 2021, 864,918 people had received at least one dose of the vaccine.
  - Government target: vaccinate 70 percent of the adult population by mid-2022.
  - Relief measures: free food, moratorium on loan repayments, soft loans to targeted groups and individuals.
- Economic impacts and uncertainties:
  - Growth slowed; food prices spiked; fiscal deficit and public debt increased significantly.
  - Recovery depth and breadth dependent on vaccination campaign success and global factors (terms of trade, global financial market conditions).
  - Concerns about scarring effects, particularly in the labor market.

### Recent Economic Development and Outlook
- Pre-pandemic performance:
  - Ghana growth in 2019: 6.5 percent.
  - Successful completion of the Fund-supported ECF program in 2019.
- Pandemic impact:
  - GDP growth at end-2020: 0.4 percent y/y.
- Projections:
  - Growth projected to rebound to 4.7 percent in 2021 as domestic and global conditions improve.
- External position and inflation:
  - External position remained strong in 2020 supported by higher gold prices and steady remittance inflows.
  - Inflation: inched up above the Bank of Ghana’s target band, but has since retreated to the policy corridor and is expected to stay within the band in the near-term.
- Authorities’ stance:
  - Prepared to introduce additional supportive measures and make appropriate policy adjustments to safeguard macroeconomic stability without compromising the recovery.

### Fiscal Policy
- Authorities’ commitments:
  - Committed to fiscal and debt sustainability.
  - Strategy emphasizes improving spending efficiency and widening the tax base.
- Digitalization initiatives:
  - Expect greater use of digitalization to improve revenue collection and administration through electronic submission of tax returns and property rate collections.
- 2021 Budget tax initiatives:
  - Covid-19 Health Levy; Sanitation and pollution levy (SPL); energy sector recovery levy (Delta Fund).
  - 5 percent financial sector levy on pre-tax profits of banks to help defray cost of banking sector’s clean up reforms.
  - Developing a gaming policy to generate revenue from online betting and automation of services.
- Medium-term fiscal framework:
  - Path towards restoring the fiscal rule once the pandemic abates, and strengthen it further with a cap on public debt.
  - Recognize that debt sustainability hinges on mitigating fiscal risks, improving spending controls and debt management, and structural reforms.
  - Reviewing the medium-term debt management strategy to ensure a well-balanced mix of domestic and external bond issuance to reduce costs and financing risks.

### Monetary and Exchange Rate Policies
- Monetary stance:
  - Authorities feel current monetary policy stance is appropriate.
  - Regulatory reliefs extended during the COVID crisis will be maintained until more clarity on recovery.
  - At the last monetary policy committee meeting in May 2021, the policy rate was lowered by 100 basis points.
  - Authorities stand ready to tighten policy if warranted.
- Regulatory and liquidity measures:
  - Relief measures maintained to support credit growth and ensure sufficient banking system liquidity.
- Exchange rate policy and reserves:
  - Bank of Ghana (BOG) committed to a flexible exchange rate regime, limiting interventions to smooth excessive volatility.
  - Forward foreign exchange program and market conduct rules beginning to streamline activities and shape price discovery.
  - BOG activating gold purchases to build reserves, enhance currency stability, foster investor confidence and attract FDIs.
  - Larger gold holdings intended to increase BOG’s leverage in raising cheaper financing to boost short-term foreign exchange liquidity.

### Financial Sector Policies
- Banking sector performance and risks:
  - Recent reforms strengthened the banking sector and increased resilience.
  - Banks’ assets, deposits and investments grew steadily through the pandemic.
  - Authorities attentive to possible macro-financial vulnerabilities if banks rebalance away from government securities to more corporate bond holdings.
  - Unwinding of temporary relief measures could expose banks to balance sheet impairments.
- Supervisory actions:
  - BOG engaging with banks, asking them to voluntarily increase provisioning or raise capital, and adopt effective cost controls.
- Ongoing reforms and technical assistance:
  - Requested Fund TA to strengthen analytical framework and provide guidance on operationalization of the Financial Stability Council.
  - Draft Resolution Framework & Policy Statement pending approval by BOG Management ahead of implementation.
- AML/CFT progress:
  - Ghana removed from FATF ‘grey list’ on June 25, 2021 following enactment of various legislations to criminalize money laundering and other illicit financial activities.
  - Authorities will continue to work with the Inter-Governmental Action Group against Money Laundering in West Africa to safeguard Ghana’s AML/CFT regime.

### Structural Reforms
- CARES program objectives:
  - Advance structural reforms to foster economic diversification, create jobs and boost growth potential.
  - Emphasize stabilization and revitalization, food security, enhancing private sector competitiveness and strengthening health infrastructure.
  - Consolidate investments in sectors with competitive strength in context of African Continental Free Trade Area.
- Power sector reforms:
  - Continue reforms to ensure affordable and reliable power supply.
  - Re-negotiate power purchase agreements, consolidate sector’s financial position, limit arrears accumulation.
  - Seek diversification of electricity production mix and boost uptake of natural gas and renewables to reduce carbon footprint.
- Ghana Development Bank:
  - Modeled on the German Development Bank—KFW; will commence operations this quarter to support private sector businesses.
  - World Bank providing $200 million seed capital; European Investment Bank providing funding support; KFW extending technical assistance including governance safeguards and capacity development.
- Digitalization program:
  - Developing a platform consolidating national identification and national electronic address system on a common digital platform to improve service delivery, including social protection.

### Concluding Remarks
- Authorities emphasize:
  - Need to continue supporting the recovery, preserve domestic stability, avoid scarring from the pandemic, and launch economic revitalization agenda through the CARES program to support sustainable and inclusive growth going forward.

*Source: IMF staff report and Ghana authorities statements as presented in the supplied content.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2021/english/1ghaea2021001.pdf_