## 1ghaea2024002-print-pdf

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### Executive summary — context and program status
- Policy adjustment and reforms under the program are delivering on their objectives, with clear signs of stabilization emerging.
- Good progress is being made on the debt restructuring.
- With the December 2024 general elections approaching the authorities reiterated their strong commitment to the policies and reforms under the program.
- Date: June 14, 2024.
- Fund arrangement:
  - 36-month arrangement under the Extended Credit Facility in the amount of 303.8 percent of quota (SDR 2.2419 billion, or about US$3 billion) — approved May 2023.
  - On completion of the second review, Ghana would have access to an additional SDR 269.1 million, about US$360 million, bringing total disbursements since program approval to about US$1.56 billion.
- Program performance highlights:
  - All end-December performance criteria (PCs) and all indicative targets (ITs)—but the one on accumulation of payables—were met.
  - End-March IT on accumulation of net international reserves missed due to cocoa sector difficulties and frontloaded energy sector payments.
  - End-March ITs on non-oil revenue and social spending missed due to temporary factors.
  - Four out of six structural benchmarks (SBs) through end-May 2024 were met; NIB solvency plan SB implemented with delay; BoG Act amendment SB required more time.
  - Authorities requesting several changes to PCs and the TMU.

### Recent economic developments and key macro outcomes
- Growth and activity:
  - 2022 real GDP growth revised up from 3.1 to 3.8 percent.
  - Preliminary data for 2023 point to a real GDP growth of 2.9 percent (above the 2.3 percent envisaged at the time of the 1st ECF review).
  - Sector performance in 2023: tertiary sector 5.5 percent, agriculture 4.5 percent, construction -9.9 percent.
- Inflation:
  - At end-December 2023, inflation fell to 23.2 percent year-on-year.
  - Inflation remained stable at 23.1 percent in May 2024.
- External sector and reserves:
  - Current account deficit improved to 1.4 percent of GDP at end-2023 (2.3 percent in 2022).
  - Gross international reserves reached US$3.7 billion (1.6 months of imports) at end-2023 (original estimate US$2.4 billion; 1.1 months).
  - Bank of Ghana’s large gold purchases accounted for about US$1.5 of the US$2.2 billion total reserves increase in 2023.
- Fiscal developments:
  - 2023 primary balance deficit (commitment basis) was 0.3 percent of GDP (0.5 percent at the 1st review).
  - Overall consolidation effort (commitment basis) reached 4 percentage points of GDP in 2023.
  - Authorities accumulated payables on a net basis (mainly energy sector) due to tight cashflow following delays in multilateral disbursements and pending IPP negotiations.
  - Preliminary non-oil revenue through end-March 2024 slightly below targets due to suspension of VAT on electricity and nationwide internet outage affecting online payments in March.
- Financial sector:
  - Financial sector stability maintained; credit growth declined and NPLs increased.
  - Government recapitalization via GFSF injected GHS4.6 billion through April 2024.
  - Banks’ nominal deposit growth: 43 percent y-o-y at end-2023.
  - Nominal private sector credit growth: 11 percent in 2023.
  - NPLs ratio increased to 20.6 percent (from 14.8 percent in December 2022).
- Debt stance:
  - Ghana remains in debt distress and debt assessed as unsustainable.
  - Following the December 2022 debt service suspension creditor discussions continue; government accumulated arrears to official bilateral and private external creditors.
  - Authorities current on newly exchanged domestic debt and multilateral debt.
  - To satisfy 2023 domestic financing needs, authorities issued large amounts of T-bills at nominal rates slightly above inflation.

### Selected fiscal indicators (percent of GDP; column years as in source: 2022, SR, 2023)
- Total Revenues: 15.7, 15.7, 16.0
- Grants: 0.2, 0.3, 0.3
- Oil Revenues: 2.0, 1.3, 1.5
- Non-oil Revenues: 13.6, 14.1, 14.2
- Primary Expenditures: 20.1, 16.2, 16.3
- Compensation of Employees: 6.4, 6.0, 6.0
- Goods and Services: 2.0, 1.0, 1.0
- Grants to Other Gov. Units: 4.7, 4.0, 4.1
- Energy Sector Transfer: 2.2, 1.9, 2.4
- Capital Expenditures: 3.9, 3.3, 2.5
- Domestically financed: 1.9, 2.1, 1.1
- Foreign financed: 2.0, 1.2, 1.4
- Other Expenditures: 0.6, 0.0, 0.2
- Primary balance (commitment basis): -4.3, -0.5, -0.3
- Memorandum items:
  - Net payable accumulation: 1.1, 0.0, 0.5
  - Non-energy: 0.0, -0.7
  - Energy: 0.0, 1.1
- Non-oil primary balance: -6.3, -1.8, -1.8
- Highly-targeted social spending (GSFP, NHIS, LEAP, and Capitation Grant): 0.44, 0.48, 0.49

### Program performance, structural reforms, and implementation status
- Program performance summary:
  - All end-December 2023 PCs and ITs except one (accumulation of payables) were met.
  - End-December adjusted PC on NIR outperformed target by over US$1.8 billion.
  - End-March 2024 NIR IT missed by about US$300 million.
  - End-March 2024 IT on non-oil revenue missed by 0.4 percent of GDP.
  - End-March 2024 IT on social spending missed by less than 0.1 percent of GDP.
  - End-March CPI inflation was below the lower outer band of the monetary policy consultation clause.
  - Article VIII-related continuous PCs were met.
- Structural benchmarks:
  - Four out of six SBs due through end-May 2024 were met.
  - End-March 2024 SB on NIB solvency plan implemented with small delay (plan adopted by cabinet in May and first recapitalization tranche disbursed).
  - End-May 2024 SB on amendments to the BoG Act required more time; authorities expect action in the next few weeks.
  - First ECG audit completed and published but qualified opinion issued; authorities committed to an unqualified opinion in the next quarterly audit.
  - Ongoing progress on end-June 2024 SBs on risk assessment and exit strategy from the gold-for-oil program and on cleaning up the taxpayer register and ledgers.

### Macroeconomic outlook and key projections
- Real GDP growth:
  - Set to pick up to 3.1 percent in 2024 (revised up from 2.8 percent).
  - Gradually increase to potential level of about 5 percent over the medium term.
- Inflation:
  - Projected to reach 15 percent by end-2024 and return within BoG’s target band (8±2 percent) by end-2025.
- External sector:
  - Following agreement with external creditors on debt treatment under the G20 Common Framework:
    - Current account deficit set to stabilize at 2.2 percent of GDP by 2026.
    - International reserves would reach 3 months of imports coverage.
- Debt sustainability:
  - Continued progress in fiscal consolidation and completion of debt restructuring would ensure public debt is firmly on a sustainable trajectory.

### Main downside risks
- External risks:
  - Intensification of regional conflicts, spillovers from war in Ukraine, commodity price volatility, protracted cocoa processing shutdowns.
  - Setbacks in comprehensive debt restructuring delaying restoration of debt sustainability.
- Domestic risks:
  - Policy slippages ahead of end-2024 general elections.
  - Heightened exchange rate volatility.
  - Slow ESRP implementation worsening energy sector finances and power outages.
  - Delays in bank recapitalization harming financial stability.
  - Exchange rate, credit, and liquidity risks.

### Policy focus for the second review (core priorities)
- Advance fiscal consolidation while protecting the vulnerable.
- Maintain a tight monetary policy and promote a flexible exchange rate to bring inflation back to single digits and rebuild foreign reserves.
- Reform policy frameworks and institutions to entrench macro stability and debt sustainability.
- Preserve financial stability after domestic debt restructuring.
- Strengthen governance and transparency.
- Bolster private sector-led and inclusive growth.

### Fiscal policy — consolidation and measures
- 2024 budget targets a primary balance surplus of 0.5 percent of GDP (commitment basis), underpinned by 0.9 percent of GDP in non-oil revenue measures.
- Authorities aim for a primary surplus of 1.5 percent of GDP by 2025 (MEFP¶6) via:
  - Raising non-oil revenue permanently to at least 16.5 percent of GDP in 2026.
  - Containing primary expenditures while protecting social and development spending.
- Notable measures and adjustments:
  - Implementation of VAT on residential electricity (expected yield 0.17 percent of GDP) suspended; alternative measures introduced (foreign income of Ghanaian residents, audits of large taxpayers, property tax collection).
  - GRA administrative measures and e-VAT rollout: roll out e-VAT to large taxpayers by end-June 2024 and to an additional 2,000 taxpayers by year-end.
  - Procurement of ITAS finalized in May 2024; operationalization by end-December 2024 (SB).
- Contingency measures if slippages occur:
  - Bring forward MTRS measures.
  - Reprioritize spending while protecting social spending at Mid-Year Budget Review or by adjusting quarterly allotments.

### Social protection and spending
- 2024 budget raised resources for social protection by 0.07 percentage points to 0.55 percent of GDP (IT); allocations set to increase to 0.60 percent of GDP in 2025.
- Specific program changes:
  - Doubling of LEAP cash-transfer benefit and automatic inflation indexation of LEAP benefits.
  - 25-percent increase in GSFP meal benefit.
  - 25-percent increase in Capitation Grant benefit.
  - 40-percent increase in allocation to NHIS to clear medical claim arrears and improve availability of essential medicines and child vaccines.
- Medium-term targets with World Bank support:
  - Increase LEAP benefits to 20 percent of pre-transfer household consumption and expand coverage from 350,000 to 450,000 households by end-2024.
  - Increase GSFP meal benefit to cover 30 percent of children’s daily calorie need.

### Structural fiscal reforms and revenue administration
- Objectives:
  - Permanently increase revenue via base-broadening and compliance.
  - Rationalize public spending via strengthened PFM systems and public investment management.
  - Modernize fiscal framework and institutions; address energy and cocoa sector vulnerabilities; bolster SOE governance.
- Key tax-administration actions:
  - GRA joined Global Forum on Transparency and Exchange Information for Tax Purposes.
  - Strengthen VAT enforcement on residential accommodations; require VAT payment for property registration.
  - Publish quarterly compliance report data starting end-June 2024.
  - GRA cleaning taxpayer register and ledgers (end-June 2024 SB); data governance framework developed.
  - MTRS implementation started; mid-implementation review planned in 2025.
  - Draft Extractive Industry Fiscal Regime bill expected to be submitted to Parliament by end-December 2024.
- PFM and procurement:
  - Inventory of public investment projects submitted to Cabinet in March 2024 (SB).
  - Expand GIFMIS coverage; integrate GHANEPS with GIFMIS; goal: 90 percent of procurements (by value) registered in GHANEPS by 2025Q4.
  - Separate budget line for MDAs for arrears clearance from 2025 Budget.
  - MoF to submit amendments to the Fiscal Responsibility Act (2018) to Parliament by end-October 2024 (SB).

### Energy sector — ESRP and operational measures
- PURC increased electricity tariffs by about 5 percent in June 2024.
- Tariff band changes in 2024H1:
  - Reduction for residential consumers of 301 kWh and above: about 6.6 percent.
  - Reduction for non-residential consumers of 301 kWh and above: 5 percent.
  - Low voltage industrial tariff reduced by 4.9 percent; high voltage by 4.7 percent.
- Progress on renegotiating energy sector charges and legacy debt: agreements in principle with some IPPs on reductions and deferrals; negotiations ongoing.
- ECG single account first quarterly audit published with a qualified opinion; authorities working with WB to achieve unqualified opinion next audit.
- PURC quarterly tariff decisions remain discretionary; authorities requested IMF and WB assistance to improve transparency and methodology by end-2024.

### Cocoa sector — Cocobod turnaround
- Cocobod’s financial position improved in 2023; 2024 faces production shortfall and large increase in spot prices.
- Authorities increased farmgate price of cocoa by 58 percent in April 2024.
- Cocobod intends to increase proportion of sales at current high spot prices and seek additional spending rationalization.
- Cocobod turnaround strategy:
  - Approved by Cabinet and to be published by end-July 2024 (MEFP¶56-59).
  - Objectives: strengthen financial oversight; review producer pricing mechanism; rationalize costs; phase out quasi-fiscal activities (cocoa roads and fertilizer programs).
  - MoF established a cocoa desk; Fund TA requested for SOE oversight strategy.
- Cocobod’s 2023 figures are based on unaudited financial statements.

### Debt management, restructuring, and financing assurances
- Objective: achieve a moderate risk of debt distress by 2028 (IMF-WB LIC-DSF), bringing five external and overall debt ratios below thresholds.
- Domestic debt restructuring completed in 2023.
- Agreement reached with Official Creditor Committee (OCC) on a Memorandum of Understanding (MoU) on June 11, 2024; MoU formalizes the Agreement in Principle (AIP) from January under G20 Common Framework and expected to be signed by all parties in coming weeks.
- Engagement with commercial creditors:
  - NDA entered March 2024 to work on potential restructuring scenarios.
  - One scenario sent to IMF staff did not meet program parameters; authorities committed to reaching agreement consistent with program parameters.
- Undisbursed pre-CoD external project facilities larger than envisaged—initial estimate ~US$3.8 billion for bilateral commitments alone.
- New IT: limit total disbursements under pre-CoD project loans to not exceed US$250 million annually over 2024-25.
- Authorities will assess, reprioritize, rescale, rephase or cancel projects (new end-August 2024 SB).
- Debt management actions:
  - Continue T-bill financing in near term.
  - Develop roadmap for gradual resumption of bond issuances; publish medium-term debt management strategy and annual borrowing plan as macro situation normalizes.

### Financing assurances and proposed program financing (USD million; values preserved)
- Pre-restructuring Financing Gap1: 2023 3,364; 2024 3,864; 2025 4,304; 2026 2,373; Total 13,904
- Official Financing: 2023 687; 2024 2,043; 2025 1,148; 2026 734; Total 4,612
- IMF: 2023 600; 2024 1,320; 2025 720; 2026 360; Total 3,000
- World Bank2: 2023 276; 2024 794; 2025 283; 2026 74; Total 1,508
- African Development Bank: 2023 60; 2024 400; 2025 104; Total (implied) 564
- Exceptional financing - Debt service relief3: 2023 2,677; 2024 1,821; 2025 3,156; 2026 1,639; Total 9,293
- Official creditors - based on January AIP: 2023 836; 2024 766; 2025 657; 2026 604; Total 2,863
- Exceptional financing expected from commercial creditors: 2023 1,841; 2024 1,055; 2025 2,499; 2026 1,035; Total 6,430

Notes (verbatim):
- 1 Pre-restructuring financing gap before external debt treatment from bilateral and commercial creditors.
- 2 Beyond the IDA20 period, IDA financing figures are based on assumptions; actual disbursements will depend on IDA replenishment volumes, country performance, and other operational factors. Delivery of DPFs will be dependent on an agreement with the government on a strong program of policy and institutional reforms, and adequacy of the macroeconomic policy framework. In addition, the World Bank is planning to disburse US$1.4 billion for project loans during 2023-26, already included in the baseline.
- 3 Actual debt service arrears accumulated in 2023.

### Debt Sustainability Analysis (DSA) — key findings and projections
- Risk assessment:
  - Risk of external debt distress: In debt distress.
  - Overall risk of debt distress: In debt distress.
  - Granularity in the risk rating: Unsustainable.
- Baseline DSA results (accounting for domestic restructuring and agreement with OCC but not external commercial restructuring):
  - PV of external debt-to-GDP breaches its threshold until 2027.
  - External debt service-to-revenues exceeds thresholds throughout the DSA horizon.
  - PV of public debt-to-GDP breaches its 55 percent benchmark until 2034.
- Stress-test results:
  - Combined contingent liability shock would put overall public debt well above the unsustainable trajectory.
  - Debt ratios sensitive to commodity prices, exports and exchange rate shocks.
- Key projections (selected baseline values):
  - Real GDP: 2023 2.9; 2024 3.1; 2025 4.4; 2026 4.9; 2027+ 5.0.
  - CPI (end period): 2023 23.2; 2024 15.0; 2025 8.0.
  - Public debt (gross percent of GDP): 2023 82.9; 2024 82.5; 2025 80.9; 2026 79.5; 2029 66.9.
  - PV of PPG external debt-to-GDP (selected): 2023 39.5; 2024 42.3; 2025 43.9; 2026 41.8; 2028 39.3.
  - PPG debt service-to-revenue ratio (selected): 2023 3.4; 2024 19.5; 2025 29.8; 2026 24.3.
- Contingent liabilities modeled in tailored stress tests:
  - Add 2 percent of GDP in non-guaranteed SOE debt; 5 percent of GDP in financial market contingent liabilities; 2.4 percent of GDP from PPPs; total 9.4 percent of GDP.

### Monetary policy, FX, reserves, and TMU highlights
- BoG policy actions:
  - Policy rate reduced by 100 basis points to 29 percent in January 2024 (real policy rate above historical average).
  - March 2024: BoG increased CRR and introduced tiering based on loan-to-deposit ratios (from April 1, 2024):
    - Above 55 percent LDR: CRR of 15 percent.
    - Between 40 and 55 percent: CRR of 20 percent.
    - Below 40 percent: CRR of 25 percent.
  - CRR remains unremunerated.
- FX and reserves:
  - January–April 2024 gross FX interventions mostly in line with FXI budget; recent FX depreciation prompted increased interventions.
  - BoG committed to FXI policy: all central-bank FX transactions through auctions open to all banks, allocations based solely on price.
  - All MCPs maintained under previous policy considered eliminated as of February 1, 2024; impermissible spreads detected through May 28, 2024, divergence sometimes close to 2.5 percent.
  - BoG to implement reference exchange rate calculation method in line with IOSCO by end-August 2024 (new SB).
- TMU key elements:
  - Definitions for NIR, BoG claims on central government, PV of new external debt ceilings, primary fiscal balance (commitment basis) measurement and adjustors, non-accumulation of external debt payments arrears, zero ceiling on newly contracted collateralized debt.
  - Program gold price: US$1,826.92 per ounce (Bloomberg, February 2023).
  - Net International Reserves (NIR) adjustors include upward adjustment for debt service payments on restructured commercial claims and for excess budget grants/loans (except where used to repay outstanding domestic arrears more rapidly than programmed).
  - PV calculation discount rate: unified discount rate of 5 percent.

### Financial sector stability, recapitalization and AML/CFT
- Bank recapitalization:
  - BoG and government implementing strategy to rebuild banks’ capital buffers after the DDE.
  - BoG adopting escalating punitive remedial and corrective measures against non-compliant banks; target to close one-third of capital gaps per year (end-March 2024 and new end-March 2025 SBs).
  - BoG intends to lift temporary regulatory forbearance measures by 2027 and enforce NPL reporting/provisioning.
  - Government-funded part of GFSF started recapitalizing state-owned banks with marketable government bonds; WB operation approved to fund second part of GFSF.
  - Staff baseline assumes total cost of financial sector restructuring of 2.6 percent of GDP (including legacy costs).
- NIB resolution:
  - Strategy approved by Cabinet in May 2024; series of capital injections envisaged (first injection completed in May 2024).
  - Special review by an international firm (ToR to be determined with IMF staff; new end-July 2024 SB).
  - Overarching restructuring plan by end-March 2025 (new SB).
- SDIs and asset management:
  - Prioritize undercapitalized rural banking system and DDE-related undercapitalization of ARB Apex Bank.
  - Financial support conditional on regulators’ assessment of recapitalization plans and viability.
  - 2025 government to address claims of investors of asset management firms with revoked licenses.
- AML/CFT:
  - Strengthen beneficial ownership transparency, build capacity for reporting entities, implement Customer Due Diligence requirements.
  - Financial Intelligence Center started National Risk Assessment in March 2024 to prepare for third GIABA mutual evaluation in 2025.

### Governance, anticorruption, and public sector reforms
- Authorities requested a Governance and Corruption Diagnostic Assessment from the Fund; inter-departmental IMF mission end-2023 and assessment report to be shared with authorities.
- Auditor General preparing follow-up report of audit of COVID-19 spending to be published by end-June 2024.
- Attorney General submitted new Conduct of Public Officers Act to Cabinet to strengthen asset declaration system.
- Evaluation of ten-year NACAP underway; work on a new NACAP for next 10 years.
- PFM and procurement reforms: Blanket Purchase Agreement functionality in GIFMIS by end-September 2024; GHANEPS–GIFMIS integration by end-December 2024; TSA integration to end-March 2026; GIFMIS rollouts to bring onboard 549 MDAs/MMDAs by end-March 2025.

### Program monitoring, modifications, and staff recommendation
- Modifications proposed to PCs and ITs for end-June through end-December 2024 (primary balance PC, non-oil revenue IT, NIR targets at end-September and end-December 2024, and PC on NPV of new contracted external debt to accommodate maritime security loan).
- New instruments and adjustors: new IT (ceiling) on post-CoD disbursements and an asymmetric adjustor for NIR to account for external debt service from restructuring of commercial claims.
- New conditionality through 2025: PCs and ITs until end-June 2025 and 9 new SBs for end-July 2024 through end-June 2025 focused on macro-critical reforms.
- Staff supports completion of the second review under the ECF arrangement, the financing assurances review related to private sector creditors, and the request for modification of performance criteria.

### Implementation timelines — selected structural benchmarks and deadlines (verbatim deadlines where provided)
- Publish PURC’s final report of first quarterly audit of ECG's single account — End-February 2024 — Met.
- BoG escalates remedial measures against banks not complying with one-third recapitalization and non-negative CAR — End-March 2024 — Met.
- Develop and submit to Cabinet centralized inventory of all ongoing and planned public investment projects — End-March 2024 — Met.
- BoG Act amendments to address IMF safeguard recommendations — End-May 2024 — Not Met.
- Present BoG risk assessment and exit strategy for Gold-for-Oil — End-June 2024.
- GRA final report of taxpayer register cleaning and ledgers — End-June 2024.
- Operationalize Integrated Tax Administration System (ITAS) — Reset to end-December 2024.
- Adopt revised BoG reference rate methodology — End-August 2024.
- Complete diagnostic of post-CoD projects and prioritization strategy — End-August 2024.
- Fully integrate GHANEPS with GIFMIS — End-December 2024.
- BoG finalize ToR and complete special review of NIB by end-2024 — End-July 2024 / End-2024.
- Forward-looking restructuring plan for NIB — End-March 2025.
- MoF to bring onboard 549 MDA/MMDA spending unit accounts into GIFMIS — End-March 2025.
- Design strategy for state-owned banks governance/risk management — End-April 2025.
- Submit draft amendments to the Fiscal Responsibility Act (2018) to Parliament — End-October 2024.

### Staff appraisal — priorities emphasized (verbatim emphases preserved)
- Perseverance in program implementation and further progress toward restructuring agreements with commercial creditors will be critical.
- Determination to keep the domestic revenue mobilization agenda on track and to tighten expenditure commitment controls ahead of the December 2024 general elections is of the essence to avoid policy slippages as experienced in past electoral cycles.
- Political will to deploy contingency revenue and expenditure measures as needed will also be instrumental.
- Continuing to engage with external commercial creditors to reach an agreement on a debt treatment consistent with program parameters is essential to restoring debt sustainability.

*International Monetary Fund — excerpt from Ghana: IMF staff report (1ghaea2024002-print-pdf; June 14, 2024).*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Context
- Policy adjustment and reforms under the program are delivering on their objectives, with clear signs of stabilization emerging.
- Good progress is being made on the debt restructuring.
- With the December 2024 general elections approaching and considering past episodes of election-driven policy slippages, the authorities have reiterated their strong commitment to the policies and reforms under the program.
- Date: June 14, 2024.

### Program status and financing
- The IMF’s Executive Board approved in May 2023 a 36-month arrangement under the Extended Credit Facility in the amount of 303.8 percent of quota (SDR 2.2419 billion, or about US$3 billion).
- On completion of the second review, Ghana would have access to an additional SDR 269.1 million, about US$360 million, bringing total disbursements since program approval to about US$1.56 billion.
- Program performance has been generally strong:
  - All end-December performance criteria (PCs) and all indicative targets (ITs)—but the one on accumulation of payables—were met.
  - The end-March IT on the accumulation of net international reserves was missed given difficulties in the cocoa sector and frontloaded energy sector payments.
  - The end-March ITs on non-oil revenue and social spending were missed due to temporary factors.
  - Four out of six structural benchmarks (SBs) through end-May 2024 were met.
  - The end-March 2024 SB on the design and launch of a plan to address NIB’s solvency challenges was implemented with a delay.
  - More time was needed to discuss with Fund staff the amendments to the Bank of Ghana Act (end-May 2024 SB).
  - The authorities are requesting several changes to PCs and the TMU.

### Recent economic developments and key macroeconomic outcomes
- Growth and activity:
  - 2022 real GDP growth revised up from 3.1 to 3.8 percent.
  - Preliminary data for 2023 point to a real GDP growth of 2.9 percent, above the 2.3 percent envisaged at the time of the 1st ECF review.
  - Sector performance in 2023: tertiary sector 5.5 percent, agriculture 4.5 percent, construction -9.9 percent.
- Inflation:
  - At end-December 2023, inflation fell to 23.2 percent year-on-year.
  - Inflation remained stable at 23.1 percent in May 2024.
- External sector and reserves:
  - Current account deficit improved to 1.4 percent of GDP at end-2023 (2.3 percent in 2022).
  - Gross international reserves reached US$3.7 billion (1.6 months of imports) at end-2023, compared to an original estimate of US$2.4 billion (1.1 months of imports).
  - Bank of Ghana’s large gold purchases accounted for about US$1.5 of the US$2.2 billion total reserves increase in 2023.
- Fiscal developments:
  - The 2023 primary balance deficit (commitment basis) was lower than programmed, at 0.3 percent of GDP (0.5 percent at the 1st review).
  - Authorities accumulated payables on a net basis (mainly in the energy sector) due to tight cashflow following delays in multilateral disbursements and pending IPP negotiations.
  - Overall consolidation effort (commitment basis) reached 4 percentage points of GDP in 2023, driven by large across-the-board expenditure adjustment and buoyant non-oil revenue.
  - Preliminary non-oil revenue data through end-March 2024 suggest collections running slightly below targets due to the suspension of the VAT on electricity and a country-wide internet outage affecting online tax payments in March.
- Financial sector:
  - Financial sector stability has been maintained, but credit growth has declined and non-performing loans increased.
  - Government recapitalization of state-owned banks injected GHS4.6 billion via the Ghana Financial Stability Fund through April 2024.
  - Banks’ nominal deposit growth: 43 percent y-o-y in nominal terms at end-2023.
  - Nominal private sector credit growth: 11 percent in 2023.
  - Non-performing loans (NPLs) ratio increased to 20.6 percent (from 14.8 percent in December 2022).
- Debt stance:
  - Ghana remains in debt distress, and debt is assessed as unsustainable.
  - Following the debt service suspension announced in December 2022 and while creditor discussions continue, the government has accumulated arrears to official bilateral and private external creditors.
  - Authorities have remained current on the newly exchanged domestic debt and multilateral debt.
  - To satisfy 2023 domestic financing needs, authorities issued large amounts of T-bills at nominal interest rates slightly above inflation.

### Selected fiscal indicators (Text Table 1 — Percent of GDP; values presented in source)
- Total Revenues: 15.7, 15.7, 16.0
- Grants: 0.2, 0.3, 0.3
- Oil Revenues: 2.0, 1.3, 1.5
- Non-oil Revenues: 13.6, 14.1, 14.2
- Primary Expenditures: 20.1, 16.2, 16.3
- Compensation of Employees: 6.4, 6.0, 6.0
- Goods and Services: 2.0, 1.0, 1.0
- Grants to Other Gov. Units: 4.7, 4.0, 4.1
- Energy Sector Transfer: 2.2, 1.9, 2.4
- Capital Expenditures: 3.9, 3.3, 2.5
- Domestically financed: 1.9, 2.1, 1.1
- Foreign financed: 2.0, 1.2, 1.4
- Other Expenditures: 0.6, 0.0, 0.2
- Primary balance (commitment basis): -4.3, -0.5, -0.3
- Memorandum items:
  - Net payable accumulation: 1.1, 0.0, 0.5
  - Non-energy: 0.0, -0.7
  - Energy: 0.0, 1.1
- Non-oil primary balance: -6.3, -1.8, -1.8
- Highly-targeted social spending (GSFP, NHIS, LEAP, and Capitation Grant): 0.44, 0.48, 0.49
- (Column years as presented in source: 2022, SR, 2023)

### Program performance and structural reforms
- Program performance summary:
  - All end-December 2023 PCs and ITs except one (accumulation of payables) were met.
  - End-December adjusted PC on NIR outperformed the target by over US$1.8 billion.
  - End-March 2024 NIR IT missed by about US$300 million.
  - End-March 2024 IT on non-oil revenue missed by 0.4 percent of GDP.
  - End-March 2024 IT on social spending missed by less than 0.1 percent of GDP.
  - End-March CPI inflation was below the lower outer band of the monetary policy consultation clause.
  - Article VIII-related continuous PCs were met.
- Structural benchmarks:
  - Four out of six SBs due through end-May 2024 were met.
  - End-March 2024 SB on NIB solvency plan implemented with a small delay; plan adopted by cabinet in May and first recapitalization tranche disbursed.
  - End-May 2024 SB on amendments to the BoG Act required more time; authorities expect action in the next few weeks.
  - First ECG audit completed and published but qualified opinion issued due to lack of access to information; authorities committed to an unqualified opinion in the next quarterly audit.
  - Progress under way on end-June 2024 SBs on risk assessment and exit strategy from the gold-for-oil program and on cleaning up the taxpayer register and ledgers.

### Outlook and risks
- Macroeconomic outlook: remains positive but subject to significant downside risks.
- Main downside risks:
  - Deterioration of the external environment.
  - Delays in implementation of the authorities’ comprehensive debt restructuring.
  - Policy and reform slippages ahead of the end-2024 general elections.
- Second review policy focus:
  - Advancing fiscal consolidation while protecting the vulnerable.
  - Maintaining a tight monetary policy and promoting a flexible exchange rate to bring inflation back to single digits and rebuild foreign reserves.
  - Reforming policy frameworks and institutions to entrench macroeconomic stability and debt sustainability.
  - Preserving financial stability in the wake of the domestic debt restructuring.
  - Strengthening governance and transparency.
  - Bolstering private sector-led and inclusive growth.

### Mission and report preparation
- Discussions took place in Accra during April 2-12, 2024.
- The mission team met with Minister of Finance Mohammed Amin Adam, Governor of the Bank of Ghana Ernest Addison, and other senior officials, and engaged with representatives from various government agencies, banks, and development partners.
- Mission team composition (as in source): Mr. Roudet (Head), Mr. Crispolti, Mr. Nolin, Mr. Sode, Ms. Wiriadinata (all AFR), Ms. Baum (SPR), Ms. Yang (FAD), and Mr. Kogan (MCM). Assisted by Mr. Medina (resident representative) and Mr. Ahinakwah (local economist). Mr. Akosah (OED) participated in key policy meetings. Ms. Molosiwa and Ms. Ndome-Yandun assisted with the preparation of this report.

*Executive Summary — Ghana: IMF staff report (June 14, 2024).*

### 12. The macroeconomic outlook remains positive. Notwithstanding headwinds from the

### 12. The macroeconomic outlook remains positive. Notwithstanding headwinds from the

### Macroeconomic outlook and key projections
- Real GDP growth is set to pick up to 3.1 percent this year (revised up from 2.8 percent to reflect the resilience of the economy) and to gradually increase to its potential level of about 5 percent over the medium term.
- Inflation is projected to reach 15 percent by the end of the year and to return within the BoG’s target band (8±2 percent) by end-2025.
- Following the agreement with external creditors on the debt treatment under the G20 Common Framework:
  - The current account deficit is now set to stabilize at 2.2 percent of GDP by 2026.
  - International reserves would reach 3 months of imports coverage.
- Continued progress in fiscal consolidation and the completion of the debt restructuring would ensure that Ghana’s public debt is firmly on a sustainable trajectory.

### Downside risks
- External risks:
  - Intensification of regional conflicts, spillovers from the war in Ukraine, or commodity price volatility could raise imported inflation and risk aversion.
  - Protracted shutdowns at cocoa processing factories could affect exports and growth.
  - Setbacks in implementing the comprehensive debt restructuring could delay restoring debt sustainability and weaken confidence.
- Domestic risks:
  - Policy slippages ahead of the end-2024 general elections could undermine macroeconomic stability, deteriorate debt dynamics and complicate discussions with external creditors.
  - Heightened exchange rate volatility could complicate achievement of inflation objectives.
  - Slow progress in implementing the revised Energy Sector Recovery Program (ESRP) could worsen the energy sector’s financial situation and intensify power outages.
  - Delays in recapitalizing banks could deteriorate financial sector stability.
  - Exchange rate, credit, and liquidity risks further add to these vulnerabilities.

### Policy discussions — overarching objectives
- Consolidate stabilization gains and restore debt sustainability through multi-year fiscal consolidation and structural reforms to:
  - Entrench fiscal discipline.
  - Improve the effectiveness of monetary policy and ensure greater exchange rate flexibility.
  - Secure financial sector stability, including addressing legacy issues.
  - Strengthen governance and transparency.
  - Foster inclusive growth to sustain durable poverty reduction.

### A. Continued fiscal consolidation to restore debt sustainability
- 2024 budget targets a primary balance surplus of 0.5 percent of GDP (commitment basis), underpinned by 0.9 percent of GDP in non-oil revenue measures.
- Authorities aim to bring the primary surplus to 1.5 percent of GDP by 2025 (MEFP¶6), predicated on:
  - Raising non-oil revenue permanently to at least 16.5 percent of GDP in 2026 via base-broadening and strengthened compliance (consistent with the Medium Term Revenue Strategy, MTRS).
  - Containing primary expenditures while making space for social and development spending.
- Measures and adjustments:
  - Implementation of VAT on residential electricity (expected yield 0.17 percent of GDP) was suspended due to strong social resistance; authorities committed to implementing when inflation dynamics are more conducive (MEFP¶8).
  - Alternative measures introduced to offset the revenue loss (including foreign income of Ghanaian residents, audits of large taxpayers, and property tax collection) (MEFP¶9).
  - Ghana Revenue Authority (GRA) undertaking administrative measures to ensure revenue measures in the 2024 Budget deliver expected yields (¶21).
- External-financed investment pressures:
  - Outstanding undisbursed amounts under external project facilities signed before the debt restructuring cut-off date (CoD; end-December 2022) are much larger than initially envisaged (¶34).
  - Associated disbursements will be higher than initially envisaged and limited to US$250 million over 2024-25 to avoid undermining Ghana’s debt dynamics (new IT).
  - Authorities are reprioritizing and streamlining investment projects and engaging official bilateral partners to ensure phasing of post-CoD disbursements is consistent with the program.
- Contingency measures (MEFP¶10) if slippages or revenue underperformance occur:
  - Bring forward implementation of measures identified under the MTRS.
  - Reprioritize spending execution while protecting social spending at the Mid-Year Budget Review or by adjusting quarterly allotments.

### B. Social impact, spending, and policies
- Strengthening social protection to cushion the vulnerable amid high inflation and financing constraints.
- 2024 budget raised resources for social protection programs by 0.07 percentage points to 0.55 percent of GDP (IT); budget allocations set to increase to 0.60 percent of GDP in 2025.
- Specific program changes implemented:
  - Doubling of the cash-transfer benefit under the Living Empowerment Against Poverty (LEAP) program and enactment of automatic inflation indexation of LEAP benefits.
  - 25-percent increase in the meal benefit under the Ghana School Feeding Program (GSFP).
  - 25-percent increase in the Capitation Grant benefit for basic education.
  - 40-percent increase in the allocation to National Health Insurance Scheme (NHIS; MEFP¶12), helping to clear medical claim arrears and improve availability of essential medicines and child vaccines.
- Reforms with World Bank support (MEFP¶13), medium-term aims:
  - Achieve operational efficiencies via improved procurement, reduced administrative costs, digitalization, and enhanced audits.
  - Increase LEAP benefits to 20 percent of pre-transfer household consumption and expand coverage from 350,000 to 450,000 households by end-2024.
  - Increase GSFP meal benefit to cover 30 percent of children’s daily calorie need.

### C. Structural fiscal reforms to entrench fiscal discipline
- Fiscal structural agenda objectives:
  - Permanently increase revenue through base-broadening and compliance measures.
  - Rationalize public spending via strengthened public financial management (PFM) systems (budget controls, spending efficiency, transparency, public investment management, prevention of arrears).
  - Modernize fiscal framework and institutions.
  - Address vulnerabilities in the energy and cocoa sectors.
  - Bolster State-Owned Enterprises (SOEs) governance.
- Domestic revenue mobilization and tax administration:
  - GRA joined the Global Forum on Transparency and Exchange Information for Tax Purposes; leveraging information for audits and voluntary disclosure of foreign-sourced income.
  - Strengthening VAT enforcement on sales of residential accommodations by VAT registration of large property developers, making VAT payment prerequisite for property registration, and mandating VAT payments via GRA’s online portal.
  - Collect monthly information on property sales from developers; enhanced audits on large taxpayers (PIT, CIT, VAT); publish online quarterly compliance report data starting from end-June 2024.
  - Roll out e-VAT system to large taxpayers by end-June 2024 and extend it to an additional 2 ,000 taxpayers by year-end.
  - Procurement of the Integrated Tax Administration System (ITAS) finalized in May 2024; operationalization by end-December 2024 (SB).
  - GRA steps to clean taxpayer register and ledgers (end-June 2024 SB); data governance framework developed.
  - Implementation of the MTRS started (MEFP¶47) to increase tax revenue over 2024-27; mid-implementation review planned in 2025.
  - Draft Extractive Industry Fiscal Regime bill expected to be submitted to Parliament by end-December 2024 (after several delays).
- Public Financial Management (PFM) progress:
  - Enhanced budget monitoring and strengthened cash management (MEFP¶35).
  - Inventory of all ongoing and planned public investment projects submitted to Cabinet in March 2024 (SB) for portfolio rationalization (MEFP¶37).
  - Expanding coverage and functionality of GIFMIS (MEFP¶38 and ¶42) and streamlining statutory funds per Cabinet strategy (MEFP¶41; new end-June 2025 SB).
  - Slow progress in broadening coverage of the Treasury Single Account (TSA) and enhancing oversight of financial transactions (MEFP¶40).
- Public procurement governance:
  - Rollout of GHANEPS to all MDAs and MMDAs; plan to integrate GHANEPS with GIFMIS to ensure only budget-approved projects/purchase orders proceed to award.
  - Goal of reaching 90 percent of total procurements (by value) registered in GHANEPS by 2025Q4.
- Arrears clearance:
  - MoF to prioritize clearance of payables to domestic suppliers with largest macroeconomic impact; systematic monitoring of payables and payments by MDAs.
  - Separate budget line for MDAs to reflect allocations for arrears clearance starting from the 2025 Budget.
- Fiscal framework and institutions:
  - Revamp Ghana’s Fiscal Responsibility Framework with a comprehensive fiscal and debt anchor, escape clauses, and correction mechanisms.
  - Empower the Fiscal Advisory Council to enhance oversight and accountability.
  - MoF to submit amendments to the Fiscal Responsibility Act (2018) to Parliament by end-October 2024 (SB); Fund TA to support.

### Sectoral developments: Energy and Cocoa
- Energy sector (ESRP implementation; Text Figure 4; MEFP¶55):
  - Following a small reduction in electricity tariffs in 2024H1, the Public Utilities Regulatory Commission (PURC) increased electricity tariffs by about 5 percent in June to reflect exchange rate and inflation developments.
  - PURC’s quarterly tariff decisions remain discretionary, undermining transparency and timely cost-reflective tariffs; authorities requested IMF and WB assistance to improve transparency and methodology of the tariff formula by end-2024 and are exploring energy subsidy reform options.
  - Progress in renegotiating energy sector charges and legacy debt: agreements in principle with some IPPs on reductions and deferrals of fixed capacity charges, discounts on legacy debt, and favorable repayment plans; negotiations with remaining IPPs ongoing.
  - First quarterly audit of ECG’s single account for July 2022-September 2023 published (end-February 2024 SB); auditor issued a qualified opinion and found significant discrepancies with the Cash Waterfall Mechanism (CWM). Authorities working with WB to achieve an unqualified opinion in the next audit.
  - Tariff band changes in 2024H1 (no change for lifeline 0-30 kWh and 31-300 kWh bands):
    - Reduction for residential consumers of 301 kWh and above: about 6.6 percent.
    - Reduction for non-residential consumers of 301 kWh and above: 5 percent.
    - Low voltage industrial tariff reduced by 4.9 percent; high voltage by 4.7 percent.
    - Tariff bands reduced to facilitate meter programming.
- Cocoa sector:
  - Cocobod’s financial position improved in 2023; 2024 faces challenges from production shortfall and large increase in spot market prices.
  - Authorities increased the farmgate price of cocoa by 58 percent in April 2024 to prevent smuggling and support the market.
  - To avoid a cashflow deficit, Cocobod intends to increase proportion of sales at current high spot prices while seeking additional spending rationalization.

*GHANA — INTERNATIONAL MONETARY FUND (excerpt).*

### 31. Against this backdrop, full and timely implementation of Cocobod’s turnaround

### Against this backdrop, full and timely implementation of Cocobod’s turnaround strategy remains a priority

### Cocobod turnaround strategy
- Strategy approved by Cabinet and will be published by end-July 2024 (MEFP¶56-59).
- Objective: restore Cocobod’s financial sustainability through:
  - strengthening financial oversight;
  - reviewing the producer pricing mechanism—to balance the need for a fair distribution of export proceeds to farmers and for covering Cocobod’s financial and operational costs;
  - rationalizing costs—including staffing, industry, and financing costs based on a functional review of Cocobod’s departments and subsidiaries;
  - phasing out quasi-fiscal activities entailed by the financing of cocoa roads and fertilizer programs.
- The MoF has established a cocoa desk to regularly review Cocobod’s financial position.
- Authorities have requested Fund TA to develop an effective SOE oversight strategy.
- Cocobod’s 2023 figures are based on unaudited financial statements (note in Text Figure 5).

### Energy sector context (referenced figures and program assumptions)
- Text Figure 4 notes:
  - Cost of electricity purchased includes the costs beyond the generation cost such as transmission loss and collection loss.
  - Program baseline assumes implementation of quarterly and 2025 ad hoc tariff adjustments as well as some other ESRP reforms to reduce technical and commercial losses.
- Comparison elements shown (labels preserved from figure): Average End user Tariff (ECG); Average Cost per Unit of Electricity Purchased; Average Cost per Unit of Electricity Generated.
- Scenario labels preserved from figure: No Reform Scenario; Program Baseline.

### Debt management and restructuring
- Objective: achieve a moderate risk of debt distress (as per the IMF-WB LIC-DSF) by 2028, entailing bringing five external and overall debt ratios below their respective thresholds.
- Government commitment: seek sufficient external debt service relief so Ghana’s program is fully funded through 2026.
- Key milestones and actions:
  - Completion of domestic debt restructuring occurred last year.
  - Agreement reached with the Official Creditor Committee (OCC) on a Memorandum of Understanding (MoU) on June 11 2024, formalizing the agreement in principle (AIP) reached under the G20 Common Framework in early January.
  - MoU provides for a debt treatment consistent with program parameters and is expected to be signed by all parties in the coming weeks.
- Engagement with commercial creditors:
  - A non-disclosure agreement (NDA) was entered into in March 2024 to work on potential debt restructuring scenarios.
  - One scenario sent to IMF staff did not meet program parameters; authorities reaffirmed commitment to reach agreement with commercial creditors that meets program parameters.
- Monitoring and calibration of disbursements:
  - Undisbursed amounts under external bilateral and commercial facilities signed before the debt restructuring CoD are larger than anticipated—initial estimate points to about US$3.8 billion for bilateral commitments alone.
  - Authorities and OCC agreed to calibrate the pace of project disbursements consistent with program parameters.
  - Authorities will assess maturity and socio-economic value of each project, expected pace of disbursement, and associated debt service profile to prioritize by rescaling, rephasing or cancelling projects (new end-August 2024 SB).
  - New IT will monitor that total disbursements under these pre-CoD facilities do not exceed US$250 million annually over 2024-25.
- Debt management office actions:
  - Budget financing through T-bills is expected to continue this year.
  - Plan to develop a roadmap for gradual resumption of bond issuances and to publish a medium-term debt management strategy together with an annual borrowing plan as macro situation normalizes and external debt restructuring is completed.
  - Steps to increase monitoring and management of post-CoD disbursements and debt issuance from SOEs and other public entities; monitor and prevent collateralized debt issuance; strictly limit borrowing on non-concessional terms; ensure timely debt payments.

### Monetary and exchange rate policy
- BoG monetary stance and operations:
  - BoG reduced its policy rate by 100 basis points to 29 percent in January, leaving the real policy rate above its historical average.
  - In March 2024, BoG increased the cash reserve ratio (CRR) and introduced a tiering mechanism based on loan-to-deposit ratios (from April 1st, 2024).
    - Above a 55 percent loan-to-deposit ratio: CRR of 15 percent (the prevailing ratio ex ante).
    - Between 40 and 55 percent: CRR of 20 percent.
    - Below 40 percent: CRR of 25 percent.
  - The CRR remains unremunerated, shifting costs from BoG to commercial banks and incentivizing diversion of liquidity from government securities to private sector credit.
  - BoG will review these policies to ensure objectives are met without imposing undue costs or leading to excessive risk taking (MEFP¶19).
- FX market operations and MCPs:
  - January-April 2024 gross FX interventions mostly in line with program’s FXI budget and significantly below pre-program levels, but recent exchange rate depreciation prompted increased FX interventions.
  - BoG reaffirmed commitment to adopt an FXI policy and to work towards a framework where all central-bank FX transactions are conducted through auctions open to all banks, with allocations based solely on price and no limit on bid prices (MEFP¶21-22).
  - All MCPs maintained under the previous policy are considered eliminated as of February 1, 2024 (date of introduction of the Fund's new MCP policy).
  - Since new policy came into effect through May 28, 2024, impermissible spreads (MCPs) have been detected—divergence of reference rates from permissible range have at times reached close to 2.5 percent.
  - BoG will implement a reference exchange rate calculation method in line with the IOSCO Principles of Financial Benchmarks by end-August 2024 (new SB).
  - Authorities are not seeking approval of the existing MCPs; modifications due to reforms will be carved out from the continuous PC.
- Safeguards and balance sheet strengthening:
  - Progress needed on implementing the 2023 safeguards assessment recommendations (MEFP¶23).
  - First draft of amendments to the BoG Act prepared in May; submission to and approval by Cabinet (end-May 2024 SB) delayed pending further consultation with Fund staff; authorities expect action in the next few weeks.
  - BoG has mostly abstained from spending FX in the gold-for-oil (G4O) scheme since 2023Q3; BoG staff preparing risk analysis and exit strategy from G4O to present to BoG Board by end-June 2024 (SB).
  - MoF and BoG will prepare, by end-September 2024, an MoU to plan for gradual recapitalization (MEFP¶23) while respecting fiscal commitments and debt targets under the program.
  - BoG will launch an external efficiency review and, in early 2025, adopt a strategy to streamline operational costs.

### Financial sector stability and AML/CFT
- Bank recapitalization and regulatory stance:
  - BoG and government implementing strategy to rebuild banks’ capital buffers after the DDE (MEFP¶25-27).
  - Banks submitted recapitalization plans consistent with program commitments; some banks ahead of schedule.
  - BoG adopting escalating punitive remedial and corrective measures against banks that do not comply with minimum recapitalization needed to ensure no negative CARs and to close one-third of the capital gaps per year (end-March 2024 and new end-March 2025 SBs).
  - BoG intends to lift temporary regulatory forbearance measures by 2027 and enforce regulatory framework regarding NPLs to ensure appropriate reporting and provisioning.
  - Government-funded part of the GFSF has started recapitalizing state-owned banks with marketable government bonds; WB operation to fund second part of GFSF has been approved and will target undercapitalized domestic banks with funding conditional on prior capital injections by shareholders.
  - WB engaging with authorities to ensure GFSF governance follows best practices.
- Special Depository Institutions (SDIs) and asset management sector:
  - Authorities committed to addressing legacy issues and new challenges in SDIs and asset management sector in a comprehensive and cost-effective way (MEFP¶31).
  - Prioritization of addressing undercapitalization of the rural banking system and DDE-related undercapitalization of ARB Apex Bank.
  - Financial support for SDIs will be conditional on regulators’ assessment of recapitalization plans and prospects for viability.
  - Needs for changes in operational strategies, governance, and risk management to be determined case-by-case; existing regulations to be better enforced by BoG.
  - In 2025, government will address claims of investors of asset management firms with revoked licenses.
  - Staff’s baseline assumes a total cost of financial sector restructuring of 2.6 percent of GDP (including costs associated with legacy issues).
- NIB resolution:
  - Strategy to resolve NIB’s financial and operational problems approved by Cabinet in May 2024.
  - Strategy envisages a series of capital injections by government—with the first injection completed in May 2024—to address immediate liquidity needs and capital shortfalls.
  - Special review of the bank’s condition, asset quality, and business model to be performed by an international, independent, and reputable firm; terms of reference to be determined in collaboration with IMF staff (MEFP¶28; new end-July 2024 SB).
  - Overarching restructuring plan to be prepared addressing business model, risk management, and corporate governance (new end-March 2025 SB).
- State-owned banks:
  - Authorities to conduct a diagnostic review of state-owned banks (other than NIB) covering business models, governance, risk management, and legal framework and devise a reform strategy (end-April 2025 SB).
- AML/CFT:
  - Authorities committed to further improving AML/CFT framework (MEFP¶61).
  - Plans to bolster beneficial ownership transparency and build capacity of reporting entities on AML/CFT areas, including implementation of Customer Due Diligence requirements.
  - Increased sensitization and capacity building for Designated Non-Financial Businesses and Professions in priority sectors such as real estate, casinos, and dealers in precious metals and precious stones.
  - In March 2024, Financial Intelligence Center started a National Risk Assessment exercise to prepare for the third GIABA mutual evaluation that will begin in 2025.

### Structural reforms to support inclusive growth
- Strategy pillars (MEFP¶62) supported by WB:
  - improving private sector access to long-term financing;
  - promoting Special Economic Zones;
  - deepening reforms to improve the business environment.
- WB support areas:
  - operationalize the new Development Bank of Ghana;
  - reduce minimum foreign capital requirements to attract FDI;
  - finalize the new policy for Special Economic Zones.
- NDPF and recalibration:
  - Ghana’s 2022–25 Medium-Term National Development Policy Framework (NDPF) fulfils the Poverty Reduction and Growth Strategy (PRGS) requirement (Annex II).
  - NDPF focuses on inclusive growth, human capital development, and poverty reduction; assessed by WB as comprehensive and ambitious.
  - Policies underpinning NDPF need recalibration to reflect deep socio-economic impact of shocks after cabinet approval in 2022.
  - Recalibration should include higher selectivity and prioritization based on cost-benefit analysis, greater emphasis on productivity improvements in agriculture, and further expansion of targeted support to the poor and economically insecure.
  - Authorities committed to revise NDPF with support from development partners.

### Governance
- Legal and institutional reforms:
  - Important legal reforms introduced to strengthen anticorruption and governance framework, but weaknesses remain (MEFP¶60).
  - Auditor General preparing follow up report of audit of COVID-19 spending to be published by end-June 2024.
  - Attorney General submitted to Cabinet a new Conduct of Public Officers Act to strengthen asset declaration system.
  - Authorities conducting evaluation of ten-year National Anticorruption Action Plan (NACAP) that started in 2014 and working on a new NACAP for next 10 years.
  - Authorities requested a Governance and Corruption Diagnostic Assessment from the Fund; an inter-departmental IMF mission took place end-2023 and assessment report will be shared with authorities in the coming weeks.
  - Diagnostic will cover anti-corruption framework, AML/CFT, fiscal governance, financial sector oversight, and the rule of law and inform design of additional governance-related reforms under the program.

*Source: International Monetary Fund (excerpt from the provided content).*

### 49. Adequate financing assurances are in place (Text Table 4). The program is fully financed,

### 49. Adequate financing assurances are in place (Text Table 4). The program is fully financed,

### Financing assurances and program financing
- The program is fully financed, with firm financing commitments in place for the next 12 months and good prospects for adequate financing for the remainder of the program.
- Disbursement plans from the WB and the African Development Bank (AfDB) have been confirmed.
- The WB’s emergency Financial Sector Support operation is expected to disburse more gradually and in a lower amount than originally planned, but the energy Program-for-Results (PforR) operation will add an additional US$90 million to the program financing, keeping the overall official financing during the program period broadly unchanged.
- Text Table 4. Proposed Program Financing (USD million) — key figures preserved exactly as presented:
  - Pre-restructuring Financing Gap1: 2023 3,364; 2024 3,864; 2025 4,304; 2026 2,373; Total 13,904
  - Official Financing: 2023 687; 2024 2,043; 2025 1,148; 2026 734; Total 4,612
  - IMF: 2023 600; 2024 1,320; 2025 720; 2026 360; Total 3,000
  - World Bank2: 2023 276; 2024 794; 2025 283; 2026 74; Total 1,508
  - African Development Bank: 2023 60; 2024 400; 2025 104; Total (implied) 564
  - Exceptional financing - Debt service relief3: 2023 2,677; 2024 1,821; 2025 3,156; 2026 1,639; Total 9,293
  - Official creditors - based on January AIP: 2023 836; 2024 766; 2025 657; 2026 604; Total 2,863
  - Exceptional financing expected from commercial creditors: 2023 1,841; 2024 1,055; 2025 2,499; 2026 1,035; Total 6,430

Notes from the table (verbatim):
- 1 Pre-restructuring financing gap before external debt treatment from bilateral and commercial creditors.
- 2 Beyond the IDA20 period, IDA financing figures are based on assumptions; actual disbursements will depend on IDA replenishment volumes, country performance, and other operational factors. Delivery of DPFs will be dependent on an agreement with the government on a strong program of policy and institutional reforms, and adequacy of the macroeconomic policy framework. In addition, the World Bank is planning to disburse US$1.4 billion for project loans during 2023-26, already included in the baseline.
- 3 Actual debt service arrears accumulated in 2023.

### Debt restructuring, Lending into Official Arrears (LIOA), and debt sustainability
- Staff is assured that the ongoing debt restructuring will generate financing consistent with program parameters and will restore debt sustainability.
- The agreement between authorities and the OCC on a MoU which formalizes the AIP on the debt treatment reached in January 2024 satisfies the Fund’s Lending into Official Arrears (LIOA) policy.
- Arrears to other official bilateral creditors are deemed away in application of the LIOA policy (Strand 1).
- Consistent with the Lending into Arrears policy, the authorities are making good faith efforts to reach a debt restructuring agreement with external private creditors on comparable terms and within program parameters, by maintaining a substantive dialogue with these creditors and seeking a collaborative process (see ¶32).
- Given the authorities’ progress on the debt restructuring and efforts to reach an agreement with external commercial creditors consistent with program parameters, debt is assessed as sustainable on a forward-looking basis.

### Modifications to program conditionality (MEFP Tables 1-3)
- Proposed modifications cover PCs and ITs for end-June through end-December 2024:
  - The primary balance PC and non-oil revenue IT will be modified to accommodate macroeconomic developments while maintaining the fiscal effort relative to GDP.
  - The NIR targets at end-September and end-December 2024 will be modified to reflect the large reserve accumulation in 2023, the challenges in the cocoa sector, and the larger-than-anticipated and more front-loaded nature of energy sector payments this year. This relaxation rebalances reserve accumulation efforts over the program duration while maintaining the target of 3 months of import coverage.
  - The PC on the NPV of new contracted external debt through end-December 2024 will be modified to accommodate a maritime security-related loan.
- New instruments and adjustors:
  - A new IT (ceiling) is established to ensure that the size and timing of post-CoD disbursements on pre-CoD project loans remain consistent with program parameters.
  - For the NIR, going forward, a new asymmetric adjustor will be introduced to account for the external debt service from the restructuring of commercial creditors’ claims.
- New conditionality through 2025:
  - PCs and ITs until end-June 2025 will be established along with 9 new SBs for end-July 2024 through end-June 2025, focused on macro-critical reforms.

### Enterprise risks, Fund exposure, and capacity to repay
- Enterprise risks associated with Ghana’s ECF-supported arrangement are high but mitigated by strong program design, the authorities’ high commitment, and financing assurances.
- Key capacity-to-repay (CtR) observations (verbatim):
  - Ghana is currently the largest Poverty Reduction and Growth Trust (PRGT) borrower.
  - The country’s capacity to repay the Fund is adequate but it is subject to substantial downside risks. This assessment assumes successful program and debt restructuring implementation predicated on achieving moderate risk of debt distress and restoring adequate market access.
  - Under the baseline, which does not reflect external private debt restructuring, several capacity-to-repay indicators are consistently above the top quartile of past UCT-quality arrangements for PRGT programs (Figure 1).
  - The stock of debt to the Fund as a share of GDP (based on the existing and prospective drawings) remains at elevated levels, peaking in 2025 at about 5 percent of GDP.
  - Debt service obligations to the Fund will reach a peak of 9.0 percent of total debt service in 2030.
  - Downside risks to Ghana’s capacity to repay (CtR) stem from the high level of access driven primarily by large BOP needs, implementation of the complex Fund-supported program, and uncertainties surrounding the outcome of the debt restructuring operation until completed.
  - These risks are mitigated by Ghana’s strong track record of debt service to the Fund, the continued strong commitment and ownership of the program, and the financing assurances provided by creditors and development partners.
- Reputational consideration noted: Not supporting a member facing deep macroeconomic challenges and strongly committed to its reform program would entail significant reputational risk for the Fund, with knock-on effects on support from other partners, and would also undermine prospects for external debt restructuring.
- Footnote on debt composition (verbatim):
  - Ghana’s senior debt and debt to multilateral creditors represents only 29 percent of total external debt, one of the lowest levels among LICs.

### Staff appraisal: macroeconomic performance, risks, and policy priorities
- Recent macroeconomic performance and outlook:
  - Ghana’s economy has proven more resilient than expected. The authorities’ policy and reform strategy aimed at restoring macroeconomic stability and addressing long standing vulnerabilities is bearing fruit, with clear signs of stabilization emerging.
  - In 2023, the slowdown in real GDP growth was less pronounced than anticipated and accompanied by a faster-than-expected decline in inflation, a marked improvement of the fiscal position and the external sector, and a reduction in exchange rate volatility.
  - The macroeconomic outlook remains positive, with the Fund-supported program providing an essential anchor to fully restore macroeconomic stability, reduce debt vulnerabilities, and sustain the nascent economic recovery.
  - Risks to the outlook remain firmly on the downside, especially with the 2024 general elections approaching.
- Program performance and structural reforms:
  - All end-December 2023 quantitative performance criteria and all but one ITs were met.
  - Progress was made on the structural reform agenda with four SBs met, one implemented with a small delay, and one unmet.
  - Staff commends the authorities for reaching an agreement on a debt treatment MoU with the OCC under the G20’s Common Framework.
- Policy priorities and recommendations (verbatim emphases preserved):
  - Perseverance in program implementation and further progress toward restructuring agreements with commercial creditors will be critical.
  - Determination to keep the domestic revenue mobilization agenda on track and to tighten expenditure commitment controls ahead of the December 2024 general elections is of the essence to avoid policy slippages as experienced in past electoral cycles.
  - Political will to deploy contingency revenue and expenditure measures as needed will also be instrumental.
  - Continuing to engage with external commercial creditors to reach an agreement on a debt treatment consistent with program parameters is essential to restoring debt sustainability.
- Fiscal stance and measures:
  - Staff welcomes the authorities’ commitment to maintaining the fiscal effort under the program.
  - In 2024, timely implementation of the revenue measures laid out by the government is required to offset the impact of the suspension of the VAT on electricity and to secure the expected yields of the revenue measures underpinning the 2024 Budget (0.9 percent of GDP).
  - On the spending side, efforts should streamline current expenditures and reprioritize investment to address pressures from higher externally-funded spending within fiscal targets, while creating space to bolster targeted social protection programs and cushion the vulnerable from the impact of the fiscal adjustment.
- Structural fiscal reforms and sectoral priorities:
  - Entrenching fiscal discipline will hinge on timely and sustained progress in implementing the structural fiscal reform agenda under the program.
  - Authorities should implement comprehensive reforms to enhance revenue mobilization consistent with the priorities identified under Ghana’s MTRS; improve public financial management by strengthening expenditure controls and public investment management, streamlining statutory funds, preventing arrears accumulation, enhancing fiscal rules and institutions, and strengthening governance and transparency in public procurement.
  - Energy sector: urgent action needed to reduce the energy shortfall, improve transparency of the tariff-setting mechanism, ensure tariff decisions are rules-based and reflect timely developments in the cost of energy, and strengthen governance and accountability in the sector.
  - Cocoa sector: steadfast implementation of Cocobod’s turnaround strategy, recently approved by Cabinet, is essential.
- Monetary and reserves policy:
  - BoG’s commitment to maintain a prudent monetary stance is welcome, but more progress is needed to address the Fund’s safeguards assessment recommendations.
  - A tight policy stance—supported by robust liquidity absorption operations—is warranted until inflation approaches the target band.
  - Against recent currency depreciation, BoG should remain prudent to ensure a reduction in still high and volatile inflation and re-anchor inflation expectations.
  - Continued progress on Fund safeguards advice is warranted; adoption by Cabinet of the amendments to the BoG Act should remain a priority to strengthen central bank independence.
  - The recapitalization of BoG should follow a cautious approach that considers fiscal space available under the program.
  - BoG should continue rebuilding international reserves and accelerate reforms to its FX intervention framework:
    - Limit FX interventions going forward to rebuild external buffers.
    - Authorities are encouraged to eliminate MCPs.
    - Consistent with IMF TA recommendations, BoG should adopt a formal internal FX intervention policy framework; implement all FX interventions through an open and price-based FX auction mechanism; and reform the cedi reference rate.
- Financial sector stability:
  - Continued progress in addressing financial sector challenges is essential to ringfence financial sector stability.
  - BoG has escalated punitive remedial and/or corrective measures to ensure banks implement recapitalization plans, and the MoF has started to recapitalize state-owned banks.
  - Given the rise of NPLs observed over the last year, ensuring adequate reporting and provisioning of NPLs through enhanced supervision is crucial.
  - Addressing problems at SDIs and NBFIS should be cost-effective.
  - Authorities should ensure timely and full implementation of the recently approved strategy to resolve NIB’s financial and operational problems and use lessons from NIB to address structural weaknesses in other state-owned banks, including through better enforcement of regulations and governance.
- Structural reforms for inclusive growth:
  - Government’s intention to increasingly focus on structural reforms to foster inclusive growth and poverty reduction is appropriate.
  - Continued efforts to create an environment conducive to private sector development are key to enhancing potential and underpinning sustainable job creation.
  - The NDPF should be amended to ensure Ghana’s medium-term growth and poverty objectives reflect the socio-economic impact of the shocks occurred after the COVID-19 pandemic and are supported by policy interventions taking into account the change in circumstances.
  - The ongoing Governance and Anticorruption Diagnostic will inform the next round of reforms to address existing governance weaknesses.

*International Monetary Fund — excerpt from PDF chapter section on program financing, conditionality, risks, and staff appraisal*

### 62. Given Ghana’s generally strong performance, the commitments under the program,

### 1ghaea2024002-print-pdf - 62. Given Ghana’s generally strong performance, the commitments under the program,

### Program status and staff recommendation
- Staff supports completion of:
  - the second review under the ECF arrangement,
  - the financing assurances review related to private sector creditors,
  - the request for modification of performance criteria.
- Progress has been made in advancing the comprehensive debt restructuring.

### Fiscal developments and outlook
- Historical and recent patterns:
  - Debt-to-GDP ratio surged from "55 percent in 2018 to over 90 percent in 2022."
  - Interest expense had consumed about half of government revenues, until the debt restructuring process began.
  - Efforts to restrain spending and raise revenue in 2021/22 were insufficient to restore market confidence.
- Fiscal consolidation strategy:
  - "Ghana is now embarking a large, front-loaded revenue-led fiscal consolidation program."
  - "Domestic revenue mobilization efforts start to bear fruit. Non-oil revenue increased significantly in 2023, on track to reach the medium-term target."
- Key fiscal indicators (percent of GDP, as presented):
  - Revenue: 15.7 15.7 16.0 16.7 16.9 17.3 17.4 18.0 18.0 18.0 18.0
  - Expenditure (commitment basis): 27.5 20.4 19.6 21.7 21.6 21.6 21.1 21.1 20.8 20.8 21.1
  - Overall balance (commitment basis): -11.8 -4.6 -3.6 -5.0 -4.7 -4.3 -3.7 -3.1 -2.8 -2.8 -3.1
  - Primary balance (commitment basis): -4.3 -0.5 -0.3 0.5 0.5 1.5 1.5 1.5 1.5 1.5 1.3
  - Non-oil primary balance (commitment basis): -6.3 -1.8 -1.8 -0.8 -1.0 0.0 0.1 0.2 0.3 0.2 -0.1
  - Public debt (gross): 92.7 86.1 82.9 83.6 82.5 80.9 79.5 76.1 72.5 69.3 66.9
  - Domestic debt: 49.7 37.0 38.6 33.7 34.2 31.8 31.0 29.7 27.4 25.6 25.5
  - External debt: 43.0 49.1 44.3 49.9 48.3 49.1 48.5 46.4 45.1 43.7 41.5

### Financing needs, gap, and expected financing
- Financing gap (from summary tables, in millions / as presented):
  - BOP financing gap / Financing gap: - ... 4,216 3,364 3,312 3,098 3,910 3,647 1,769 1,565 1,116 318
- Public sector gross financing needs and sources (selected lines, in GHS billions):
  - Gross financing needs (I): 133.1 120.8 84.3 135.1 142.6 197.6 174.2 180.2 207.1 226.4 224.2
  - Debt service (total): 113.5 97.6 82.1 127.4 121.0 207.8 184.7 191.1 219.6 241.2 247.9
  - Domestic debt service: 91.4 59.9 76.4 81.0 87.8 132.9 123.7 133.9 147.2 169.7 170.0
  - External debt service: 22.1 37.6 5.7 46.4 33.2 74.9 61.0 57.2 72.4 71.5 77.9
  - Gross financing sources (II): 133.1 73.8 76.7 88.8 99.0 135.1 115.5 149.2 176.9 203.2 218.7
  - Exceptional financing and residual gap (selected): Exceptional financing 0.0 17.7 7.6 19.3 27.7 17.1 17.9 12.1 0.0 0.0 0.0; Residual gap 0.0 29.2 0.0 27.0 16.0 45.5 40.7 18.8 30.2 3.2 25.5
- External financing needs and sources (US$ millions):
  - Total Needs (I): -3,165 5,588 3,936 5,058 4,550 6,525 5,546 4,409 6,219 6,186 5,778 (presented in table)
  - Total Sources (II): -3,161 1,372 572 1,746 1,452 2,615 1,899 2,640 4,654 5,070 5,460
  - Financing Gap (I-II): 0.0 4,216 3,364 3,312 3,098 3,910 3,647 1,769 1,565 1,116 318
- Expected external/exceptional financing (as listed, compact format preserved):
  - IMF...1,2006007201,320720720360000
  - World Bank...33027620679350428374000
  - AfDB...59604444000000
  - Arrears to commercial external creditors...01,84100000000
  - Arrears to official bilateral creditors...083600000000
  - Exceptional financing to cover residual financing gap: -...2,62701,9281,0552,8402,4991,0351,5651,116318

### Monetary and financial sector developments
- Monetary conditions and policy:
  - "NFA are starting to recover, and NDA growth is slowing down."
  - Monetary policy tightened by raising the policy rate and large liquidity absorption by the BoG.
  - Policy rate (end of period, table): 27.0 ... 30.0 ........................
- Monetary aggregates (selected, GHS millions and rates from Table 3):
  - Money and quasi-money (M3): 180,267 221,403 250,020 259,886 293,443 303,923 343,023 397,804 461,473 535,309 620,958
  - Broad money (M2): 135,142 165,981 185,426 194,832 217,631 227,845 254,402 295,030 342,250 397,010 460,532
  - Net foreign assets (I. Monetary Survey): -10,321 -36,294 21,038 -6,047 62,865 27,110 102,250 114,136 127,017 142,897 160,185
- Credit and banking:
  - Credit to private sector (percent of GDP, memorandum): 31.8 12.6 10.7 22.0 22.0 13.0 13.0 14.9 15.0 15.0 15.0
  - Nominal and real credit to private sector growth: "Growth of credit to the private sector has decreased in nominal terms and is negative in real terms."
  - Banking sector indicators (Table 6, selected):
    - Regulatory capital to risk weighted assets: 17.8 17.8 15.6 21.9 20.9 19.8 19.6 16.6 13.9
    - Nonperforming loans to total gross loans: 14.7 17.3 21.6 18.2 13.9 14.8 15.1 14.8 20.6
    - Return on assets (after tax): 4.5 3.8 3.7 3.5 4.0 4.3 4.6 3.2 5.4

### Capacity to repay indicators and IMF obligations
- Capacity to Repay (CtR) comparisons shown relative to UCT arrangements for PRGT countries (figures and comparator methodology noted in figure notes).
- Indicators of Ghana’s obligations to the Fund (Table 7, selected summary):
  - Total obligations based on existing and prospective credit (in millions of SDRs): 20 24 163 242 282 257 276 366 432 465 492 446 329 177 70
  - In millions of US$: 26 32 216 321 376 343 369 491 579 623 659 598 441 237 94
  - Outstanding Fund credit (in millions of SDRs): 1,286 1,644 2,514 2,851 2,878 2,664 2,431 2,108 1,719 1,298 849 446 160 27 0
  - In percent of gross international reserves (selected): 117.5 59.9 65.2 55.3 50.4 38.8 29.8 23.5 18.0 12.6 7.9 4.0 1.5 0.2 0.0
  - Net use of Fund credit (in millions of SDRs): -19.8 427.4 826.9 293.4 -16.3 -257.3 -275.9 -366.5 -432.0 -465.1 -491.7 -446.5 -329.3 -176.7 -69.9

### Balance of payments and reserves
- Current account (US$ millions): -1,695 -1,264 -1,097 -1,393 -1,865 -1,680 -1,502 -1,622 -1,867 -2,007 -2,128
- Trade balance (US$ millions): 2,699 2,732 1,691 3,280 2,144 3,763 3,092 3,219 3,932 4,345 4,665
- Gross international reserves (program, US$ millions, if financing gap closed): 1,454 2,388 3,661 3,852 5,116 5,501 6,851 7,604 9,165 10,911 12,043
- Months of prospective imports (reserves): 0.7 1.1 1.7 1.7 2.2 2.3 2.8 3.0 3.5 4.0 4.2

### Key projections and medium-term outlook (selected)
- Real GDP at constant prices (annual percent change, Table 1 headline row): 3.8 2.3 2.9 2.8 3.1 4.4 4.4 4.9 5.0 5.0 5.0
- Consumer price index (end of period): 54.1 27.6 23.2 15.0 15.0 8.0 8.0 8.0 8.0 8.0 8.0
- Gross public debt (percent of GDP): 92.7 86.1 82.9 83.6 82.5 80.9 79.5 76.1 72.5 69.3 66.9

### Policy implications and priorities reflected in the content
- Complete program reviews and financing-assurances work to sustain market confidence and unlock expected financing.
- Continue front-loaded, revenue-led fiscal consolidation and domestic revenue mobilization to reach medium-term targets.
- Maintain tight monetary policy and liquidity management to stabilize macro-financial conditions while monitoring banking sector capitalization and NPLs.

*Source: https://www.imf.org/-/media/files/publications/cr/2024/english/1ghaea2024002-print-pdf.pdf*

### Annex I. Enhanced Safeguards for Ghana:

### Annex I. Enhanced Safeguards for Ghana: Composition and Evolution of Debt

### Overview and Key Findings
- Ghana’s de facto senior debt plus other multilaterals accounts for 29.1 percent of total external debt, equivalent to 12.9 percent of GDP, leaving a significant buffer for restructurable junior debt.
- Ghana gained access to international capital markets in 2007 and implemented reforms to attract foreign interest in domestic securities, shifting borrowing from multilaterals to external and domestic bonds and resulting in a low ratio of senior debt.
- The IMF, World Bank and African Development Bank are the largest creditors with preferred status, holding US$7.5 billion altogether—about 95 percent of the outstanding senior debt at end-2022.
- Collateralized debt, entirely held by China, accounts for only 2 percent of external debt and corresponds to four loan agreements signed in 2007-18 amounting to US$655 million (0.9 percent of GDP). These are collateralized against commodity production (cocoa, bauxite and oil) and electricity sales.

### Creditor Profile and Key Statistics
- To tal Debt 58,785
- External Debt 31,431
- Multilateral Creditors 9,132
  - o/w IMF and WB 7,523
  - o/w ADB/AfDB/IADB 1,226
  - o/w Other Multilaterals 383
- Bilateral Creditors 5,334
  - o/w Paris Club 3,475
  - o/w Non-Paris Club 1,859
- Private Creditors 16,965
  - o/w Bonds (incl. nonresidents) 13,104
  - o/w Loans 3,861
- Domestic debt 27,354
- Memorandum items
  - Collateralized debt 655
  - Nominal GDP (GHS million) 841,633
  - End of period exchange rate (GHS per USD) 11.9

### Multilateral and Collateralized Debt Shares
- Multilateral debt 9,132
  - Percent of external debt 29.1
  - Percent of GDP 12.9
- o//w IMF and WB 7,523
  - Percent of external debt 23.9
  - Percent of GDP 10.6
- o/w ADB/AfDB/IADB 1,226
  - Percent of external debt 3.9
  - Percent of GDP 1.7
- o/w Other Multilaterals 383
  - Percent of external debt 1.2
  - Percent of GDP 0.5
- Collateralized debt 655
  - Percent of external debt 2.1
  - Percent of GDP 0.9

### Implications for Debt Restructuring and Policy
- The relatively low share of de facto senior and multilateral debt (29.1 percent of external debt; 12.9 percent of GDP) provides a sizable buffer to focus restructuring efforts on junior external and domestic debt.
- Collateralization limited to US$655 million (0.9 percent of GDP) and tied to specific commodity/electricity revenue streams constrains restructuring options for those particular loan agreements and highlights creditor-specific legal/contractual considerations.
- The concentration of preferred-status creditors in IMF, World Bank, and African Development Bank (US$7.5 billion; ~95 percent of outstanding senior debt at end-2022) underscores the importance of cooperation with multilaterals in any debt-sustainability framework.

*Source: Annex I. Enhanced Safeguards for Ghana: Composition and Evolution of Debt (from 1ghaea2024002-print-pdf)*

### 1. We have made progress in implementing our program policies and reforms and in

### 1. We have made progress in implementing our program policies and reforms and in

### Implementation progress and debt restructuring
- Primary fiscal balance (commitment basis) moved from a deficit of 4.3 percent of GDP in 2022 to a deficit of 0.3 percent in 2023—an overperformance compared to the target of 0.5 percent of GDP.
- On track to improve the primary balance to a surplus of 0.5 percent of GDP in 2024 through revenue measures and expenditure controls adopted in the 2024 Budget.
- Domestic part of the debt restructuring completed in 2023.
- Agreement reached with official bilateral creditors on a Memorandum of Understanding (MoU) formalizing terms of debt restructuring consistent with program parameters.
- Engaging external commercial creditors in “good faith” negotiations to strike a restructuring deal under comparable terms and consistent with program parameters.
- Inflation decline enabled the Bank of Ghana (BoG) to lower its policy rate by 100 basis points in January 2024.
- In March 2024, BoG tightened liquidity by increasing the average cash reserve ratio (CRR) and introducing a tiered approach based on the loan-to-deposit ratio to incentivize credit to the private sector.
- Advanced reforms in public financial management, revenue administration, and energy and cocoa sectors; continued steps to maintain financial sector stability.

### Performance under the IMF-supported Program
- All end-December 2023 quantitative performance criteria (QPCs) and continuous performance criteria were met.
- Reduction in inflation at end-2023 exceeded expectations, triggering a Monetary Policy Consultation completed at the time of the first program review.
- All but one of the end-December 2023 indicative targets (ITs) met. The missed IT: zero net accumulation of arrears—owing to ongoing renegotiations of arrears and Power Purchase Agreements (PPAs) with independent power producers (IPPs) and tight cash flow from delays in disbursements from development partners.
- End-March 2024: IT on change in net international reserves (NIR) was missed; confidence expressed in meeting the end-June QPC.
- End-March 2024: IT on non-oil revenue missed due to suspension of electricity VAT and delays in online tax payments from a country-wide internet outage.
- End-March 2024: IT on social spending missed because of delays in releasing budgeted resources.
- Inflation at end-March was below the lower external band of the MPCC.
- All structural benchmarks due through end-May 2024 but two were met.
  - Strategy to put NIB on a sounder financial footing completed with a small delay.
  - End-May 2024 structural benchmark on Cabinet approval of amendments to the BoG’s Act was missed due to more time needed to engage with the Fund.
- First audit of ECG’s account completed and published timely but with a qualified opinion.

### Economic stabilization and outlook
- Real GDP growth in 2023 estimated at 2.9 percent.
  - Tertiary sector growth: 5.5 percent.
  - Agriculture growth: 4.5 percent.
  - Industry sector contraction: -1.2 percent (sharp contraction in construction sub-sector; slowdown in extractive sectors due to lower oil production).
- Expenditure-side: household consumption grew 7.8 percent; low government consumption growth; contraction in investment (public and private).
- Inflation declined from a peak of 54.1 percent in December 2022 to 25.8 percent in March 2024.
- Inflation expected to continue declining given continuation of restrictive monetary and fiscal policies.
- External sector improvement (preliminary end-2023):
  - Current account: -1.4 percent of GDP vs. -2.3 percent of GDP in 2022 (improvement driven by strong income flows due to lower primary income outflows and higher remittances; exports and imports contracted).
  - Gross international reserves (GIR) at end-2023: US$3.7 billion (1.7 months of prospective imports) vs. estimate of US$2.4 billion (1.1 months of imports).
    - Improvement reflected mainly an expansion of gold purchases and delayed outflows due to lower payments to IPPs.
  - External sector less favorable in 2024Q1 due to lower-than-expected proceeds from cocoa financing and higher energy sector payments.

- Growth projections and targets:
  - Growth expected to pick up to 3.1 percent in 2024 (revised up from 2.8 percent at the time of the first review).
  - Growth expected to gradually increase towards long-term potential of around 5 percent in subsequent years as stability is restored and reforms implemented.
  - Inflation projected to reach 15 percent by end-2024 and to be brought down to the BoG’s medium-term target of 8±2 percent by end-2025.
  - Current account deficit projected to hover around 2.2 percent of GDP over the medium term in a pre-external commercial debt restructuring scenario.
  - Reserve buffers to be gradually rebuilt to 3 months of import cover by the end of the program.

### Program objectives and frameworks
- Overarching objectives: restore macroeconomic stability and debt sustainability, lay foundations for strong and inclusive growth, and reduce poverty.
- Frameworks cited: Post-Covid-19 Program for Economic Growth (PC-PEG) and Medium-Term National Development Policy Framework (2022-25).
- Key components:
  - Restore public debt sustainability through comprehensive debt restructuring and ambitious fiscal adjustment.
  - Strengthen social safety nets.
  - More flexible exchange rate policies and appropriately tight monetary policy.
  - Deep structural reforms to anchor stability and drive stronger, inclusive growth while reducing poverty.

### A. Fiscal policy — consolidation and 2024 Budget
- Fiscal consolidation aims to achieve a primary surplus of 1.5 percent of GDP by 2025 and maintain it at least until 2028.
- 2024 Budget targets a primary surplus of 0.5 percent of GDP (commitment basis).
  - Predicated on an ambitious package of non-oil revenues of about 0.9 percent of GDP and stabilization of primary expenditures as a share of GDP.
  - Revenue measures include removal of selected VAT exemptions, revision of taxes on gambling, and introduction of green taxes.
  - Compliance measures: accelerate implementation of the E-VAT system, facilitate electronic payments, and enhance oversight on large taxpayers.
  - Spending aims to reallocate toward capital outlays and social protection programs.

- Headwinds and adjustments:
  - Implementation of VAT on residential electricity sales suspended due to resistance in a high-inflation environment; alternative measures introduced to meet 2024 revenue targets.
  - Undisbursed amounts from prior external bilateral commitments: US$ 3.8 billion.
  - Need for higher externally-funded spending to address deterioration in maritime security.
  - Measures to safeguard revenue targets:
    - Leverage Global Forum data to encourage voluntary declaration on foreign source income of residents.
    - Improve large taxpayers’ compliance by strengthening audit.
    - Work with local government to revamp property rates and enhance collection for the consolidated fund.
    - Additional administrative measures to ensure revenue measures deliver expected yields (¶46).
  - Reprioritizing and streamlining domestically and foreign-financed projects to avoid compromising primary balance and debt targets.
  - Contingency measures ready:
    - Bring forward implementation of measures in the Medium-Term Revenue Strategy (MTRS).
    - Adjust MDAs’ budget allocations at Mid-Year Budget Review if needed.
    - Adjust quarterly spending allotments based on cash forecasts and domestic debt market conditions.

- Medium-term revenue goals:
  - Permanently raise the non-oil revenue-to-GDP ratio by at least 0.6 percent in 2025 and 0.4 percent of GDP in 2026.
  - Aim for non-oil revenue-to-GDP ratio of at least 16.5 percent by 2026.
  - MTRS implementation started in 2023 to deliver these objectives.

### B. Social protection
- 2024 Budget increased resources for highly targeted social protection programs by 0.07 percentage points to 0.55 percent of GDP.
- Specific measures:
  - Doubled LEAP cash transfer benefits (for the second year) and enacted automatic inflation indexation of LEAP benefits.
  - Increased Ghana School Feeding Program (GSFP) benefit by 25 percent.
  - Increased allocation for National Health Insurance Scheme (NHIS) by more than 40 percent to clear medical claim arrears and provide resources for accrued medical claims, essential medicines, and vaccines.
  - Increased Capitation Grant allocation by 25 percent.
  - Commitment to accelerate execution to achieve 2024 social spending objectives.

- 2025 and medium-term objectives:
  - Increase spending on social protection programs to 0.6 percent of GDP in 2025.
  - Expand LEAP coverage to 450,000 households (from 350,000 in 2023) after cleaning the LEAP registry.
  - Increase meal benefits under GSFP and improve procurement to reduce overhead costs.
  - Increase allocation to NHIS and Capitation Grant while enhancing operational efficiency and benefit quality.
  - Medium-term goals:
    - Gradually expand LEAP coverage to reach the extreme poor and poor households and increase benefits to 20 percent of pre-transfer household consumption.
    - Increase GSFP meal benefit to cover 30 percent of children’s daily calorie need.
    - Achieve operational efficiencies in NHIS via reduced administrative cost, digitalization, and enhanced medical audits.
  - Ensure statutory fund reform protects national health insurance programs.

### C. Public debt management strategy
- Objective: complete comprehensive public debt restructuring to restore public debt sustainability and restore a moderate risk of debt distress (IMF-WB LIC-DSF) by 2028.
  - Target reductions include bringing five external and overall debt ratios below thresholds.
  - Specific targets: reduce NPV of public debt to GDP to 55 percent and external debt service to revenues to 18 percent.
  - Debt service relief from external restructuring expected to help fully fund the program through 2026.

- Progress and actions:
  - Agreement reached with Official Creditors Committee (OCC) under the G20 Common Framework on an MoU formalizing bilateral debt restructuring terms; MoU expected to be signed in the next few weeks.
  - “Good-faith” efforts to reach collaborative agreement with external commercial creditors on comparable terms consistent with program parameters.
  - Debt service relief in the MoU and engagement with commercial creditors deemed sufficient to reduce LIC-DSF debt ratios below thresholds starting in 2028 and close the program’s external financing gap.

- Monitoring and limits on disbursements and borrowing:
  - New indicative target to monitor total undisbursed project loans contracted with external official bilateral and commercial creditors pre-OCC cut-off date (December 2022).
  - Monthly intra-government monitoring mechanism to ensure disbursements align with this limit; coordination with bilateral creditors as laid out in the MoU with the OCC.
  - Request to modify related performance criterion to accommodate higher borrowing of US$172 million for security-related spending.
  - New end-August 2024 structural benchmark: prepare a comprehensive assessment of potential future disbursements from bilateral and commercial partners for projects signed before December 2022 and a prioritization plan.

- Near-term and medium-term debt management priorities:
  - Near-term focus: ensure sufficient issuance of T-bills to finance the government deficit.
  - Develop roadmap for gradual resumption of bond issuances; favor private placements initially, with competitive auctions once domestic market access is established.
  - Any placement with non-residents must consider capital flow volatility and compatibility with program parameters.
  - Increase surveillance of debt issuance by SOEs and other public entities; strictly limit and monitor collateralized debt issuance and non-concessional borrowing; ensure debt payments made on time.
  - Post-external restructuring: develop and publish a medium-term debt management strategy and an annual borrowing and recovery plan.

- Debt transparency and systems:
  - Upgrade CD-RMS securities operation infrastructure used by the Debt Management Office to a modern system by end-2024.
  - Implementation strategy to integrate state institutions involved in contracting and servicing public debt, digitalize processes to increase pace of debt service processing, improve debt recording and accounting accuracy, and improve debt transparency.
  - Strengthen monitoring of borrowing and contingent liabilities from key SOEs (COCOBOD, ECG, VRA, GWCL, TOR, GNPC, GNGC, and BOST) and any collateralized debt issuance.

*Source: https://www.imf.org/-/media/files/publications/cr/2024/english/1ghaea2024002-print-pdf.pdf*

### 19. We will maintain a sufficiently tight monetary policy stance until inflation is on a firmly

### 19. We will maintain a sufficiently tight monetary policy stance until inflation is on a firmly

### Monetary policy stance and inflation targeting
- Monetary policy aims to bring inflation back to the Bank of Ghana’s medium-term objective of "8 ±2 percent".
- Policy will remain data-dependent to ensure a "fast-paced and orderly disinflation path" toward the inflation target.
- The BoG "stands ready to adjust the policy stance" under the monetary policy consultation clause (TMU Section II).
- Commitment to continue absorbing excess liquidity and ensuring "our policy rate is fully transmitted to the market."
- Review planned of "increased reliance on reserve requirements and the new tiering framework" to ensure delivery of objectives.
- Enhancements planned to the inflation targeting framework:
  - Improvements in the Forecast and Policy Analysis System (FPAS).
  - Improved macroeconomic data collection including a BoG inflation expectations survey.
  - Strengthening analytical capacity and central-bank monetary policy communication.

### International reserves, FX intervention budget, and related adjustments
- Target: rebuild official international reserves to "at least 3 months of import cover by the end of the program."
- Recognized headwinds: difficulties in the cocoa sector, larger-than-expected payments to IPPs, and uncertainty about timing of debt restructuring.
- Request to modify QPC: add an "asymmetric adjustor on debt service on instruments arising from the restructuring of bondholders’ and commercial creditor’s claims."
- Commitment to adhere to a "gross FX intervention budget" given reserve accumulation target and headwinds.

### Foreign reserves management, Gold-for-Oil, and FX intervention governance
- Commitment to unwind costly borrowed reserves: "ensure that the swap/sell buy-back will be unwound."
- Gold purchases from domestic producers to be at market prices; active management of portfolio risks from gold’s share of total reserves.
- BoG conducted a "thorough risk assessment of its Gold-for-Oil (G4O) program" including an exit strategy, in consultation with Fund staff.
  - These are to be presented to the BoG Board by "end-June 2024 (structural benchmark)."
- BoG Board to adopt, by "October 2024," an internal FX intervention policy document specifying measurable objectives, instruments, transparency and governance arrangements based on "discretion under constraint approach."

### Exchange rate flexibility and unified FX market reforms
- Commitment to "greater exchange rate flexibility to rebuild reserves and enhance resilience to shocks."
- Will take actions to ensure a "unified foreign exchange market and flexible exchange rate arrangement."
- Pledge not to introduce policies creating exchange rate restrictions or multiple currency practices.
- Central-bank FX transactions framework: conduct transactions "through auctions open to all banks, with allocations based solely on price, with no additional conditions, fees or guidance."
- Adoption of an FX reference rate computation method based on IMF TA recommendations to mitigate risks of multiple currency practices (proposed "end-August 2024 SB").

### Governance, safeguards, and central bank autonomy reforms
- Implementing recommendations of the "2023 IMF safeguards assessment."
- Need more time to engage IMF staff to prepare amendments to the Bank of Ghana Act of 2002 (Act 612) to strengthen BoG autonomy: "end-May 2024 SB."
- Expectation to finalize discussions and submit amendments for approval by Cabinet in the coming weeks.
- BoG Board will review and approve a new investment policy and guidelines in line with the new strategic asset allocation framework by "end-September 2024."

### BoG recapitalization and operational efficiency
- Preparing for BoG recapitalization due to balance-sheet impact from the DDEP.
- By "end-September 2024," the Ministry of Finance and the BoG will prepare a MoU to ensure gradual recapitalization within fiscal commitments and debt targets under the program.
- To strengthen recovery of net equity over time, and based on an external efficiency review, BoG will adopt in "2025Q1" a strategy to streamline operational costs.

### Financial sector recapitalization and supervision (banks)
- Post-domestic debt exchange recapitalization expectations:
  - Banks with capital shortfalls pledged to recapitalize "by at least one-third of the capital required annually for each of the three years ending in 2025" to reach a "13 percent Capital Adequacy Ratio (CAR)" without regulatory forbearance.
  - Banks with significant shortfalls aimed for a front-loaded path so all banks had a positive CAR by "end-2023."
- BoG asked banks to update plans and has taken remedial/corrective measures against non-compliant banks: "end-March 2024 structural benchmark."
- Continued measures against banks that have not complied with the "two-thirds recapitalization and the non-negative CAR requirements as of end-December 2024 (new end-March 2025 structural benchmark)."

### Ghana Financial Stability Fund (GFSF), state-owned banks, and World Bank support
- GFSF operationalized and has used government bonds to start recapitalizing some domestic banks.
- Plan to frontload recapitalizations of state-owned banks underpinned by credible plans for future viability.
- World Bank finalizing financial support targeted at undercapitalized banks conditional on prior injections by shareholders.
- Government solvency support principles: minimize costs and moral hazard, incentivize private capital injections, foster governance and efficiency reforms, and allow for orderly early government exit.

### Prompt corrective and supervisory measures; dividends and restrictions
- BoG incentivizing early recapitalization; banks behind schedule placed on strict enhanced supervision with special reporting on liquidity and solvency.
- Suspension of dividend payments for all banks "until further notice."
- Banks with capital shortfalls restricted from excessive risk-taking and certain capital expenditures.
- BoG ready to deploy other components of the PCA framework as necessary; restrictions to be reviewed/lifted consistent with improvements in capital positions and risk management.

### NIB-specific restructuring and recapitalization strategy
- Comprehensive strategy for NIB (end March-2024 structural benchmark) includes:
  - Recapitalization to reduce immediate capital/liquidity regulatory shortfalls and "at a minimum, bring NIB’s CAR to positive territory by end-September 2024."
  - A special review by an international, independent firm with terms of reference prepared "by end-July 2024 (new end-July 2024 structural benchmark)" and the examination to be completed by "end-2024."
  - A forward-looking overarching restructuring plan for NIB to be prepared "new end-March 2025 structural benchmark" addressing business model changes, additional resource needs, residual recapitalization, and governance/risk management steps.
  - Final tranche of recapitalization to occur in 2025 after completion of these steps.

### State-owned banks diagnostic and ADB treatment
- Diagnostic of structural challenges in state-owned banks and development of a strategy: "end-April 2025 structural benchmark."
- Measures addressing NIB challenges to guide ADB recapitalization: link recapitalization to inspection, governance reform, business model rationalization, and better risk management.
- BoG aims to offload its share ownership in ADB to the government.

### Lifting of regulatory forbearance
- Forbearance on recognition of debt exchange losses in CAR computations to be lifted "by one-third each year from January 2023 through end-2025."
- Schedule to lift other temporary forbearances (including those lowering CAR) will be implemented and monitored for unintended consequences.

### SDIs, asset managers, and fiscal-backed support principles
- Comprehensive, cost-effective strategy to address legacy and new challenges in SDIs and the asset management sector; government financial support as needed.
- Allocation of scarce government resources will consider capital required, number of Ghanaians affected, and moral hazard risks.
- Priority examples: undercapitalized rural banks and DDEP-related capital gaps at ARB Apex Bank, given role in financial inclusion.
- Financial support conditional on regulators’ assessment of recapitalization plans and future viability.
- 2025 actions: address risks to financial stability from asset management firms; any government payouts to use burden-sharing to minimize fiscal costs.

### Ongoing reforms to support private sector credit and financial stability
- Reforms to enhance stability and support credit include:
  - Reviewing and monitoring off-balance sheet items.
  - Completing rollout of Basel II and III capital, liquidity, and supervisory review reforms.
  - Building strategies to improve operational efficiency, business models, and competitiveness of state-owned banks and NBFIs.
  - Strengthening the nascent deposit insurance scheme.
- Consider further measures to reduce the nexus between the sovereign and financial institutions to prevent crowding out of private sector credit.

### Structural fiscal reforms: PFM, arrears, cash management
- Prioritizing structural fiscal reforms to entrench discipline, ease budget rigidities, and bolster transparency; reforms designed with Fund/WB staff.
- Arrears Clearance and Prevention Strategy:
  - Annual arrears clearances to be consistent with the medium-term budget framework under the IMF-supported program.
  - Starting from the "2025 Budget," include a separate budget line for MDAs to reflect allocations for arrears clearance.
  - Systematic collection of information on stock of payables and payments by MDAs per economic classification.
- Cash management improvements:
  - Quarterly allotments strictly aligned with the 3-month cash forecasts.
  - Tightened use of allotments as a control on GIFMIS rather than the budget.
  - MDAs required to revise cash plans quarterly.
  - Enhanced coordination among Budget division, Treasury and Debt Management divisions (TDMD) and Controller and Accountant General’s Division (CAGD).

### PFM compliance and sanctions
- Strengthening enforcement of sanctions and penalties for entities spending above quarterly allotments.
- Establishing a compliance desk at the Ministry of Finance to verify infractions and liaise with the Attorney-General for administrative or legal actions.
- Rolling out compliance training for public officials.

### Public investment management, GIFMIS, and procurement transparency
- Centralized inventory of all ongoing and planned public investment projects submitted to Cabinet in "March 2024 (structural benchmark)" containing:
  - Nature and age of projects; start/completion dates and completion rate estimates; source of financing and resources spent; list of priority projects with multi-year budget allocations; list of non-priority projects and proposed treatment.
- Plan to update inventory regularly and link public investment plan to the medium-term expenditure ceiling and annual budget documents.
- Enable "Blanket Purchase Agreement" functionality in GIFMIS to capture multi-year commitments consistent with MTEF ceilings; use mandatory for all multi-year contracts by "end-September 2024 (structural benchmark)."
- GHANEPS rollout to all MDAs and MMDAs; currently "only 21 percent of entities use it":
  - Completed training of staff in all MDAs and MMDAs.
  - Integrate GHANEPS with GIFMIS to ensure only projects/purchase orders with approved budgets and allotments proceed to award contracts by "end-December 2024 (new structural benchmark)."
  - Integration expected to increase procurement (by value) registered in GHANEPS to "50 percent of total procurement in 2025Q2" aiming for "90 percent of total in 2025Q4."
  - Publish the 2023 annual procurement report by "end-November 2024" and provide direct link between GHANEPS and the ORC website for beneficial ownership information.
- TSA integration and GIFMIS rollouts:
  - All MDAs, MMDAs and IGFs accounts in BoG and commercial banks to be integrated to the TSA by "end-March 2026."
  - Review integrity of "9,138 accounts of all spending units" to reduce number of accounts.
  - Bring onboard "549 additional MDA and MMDA spending unit accounts" into GIFMIS during "May 2024 through end-March 2025 (structural benchmark)."
  - Roll out automatic bank reconciliation (ABR) functionality for all GIFMIS-linked accounts by "end-December 2025" with a view to completing TSA reforms by "end of the IMF-supported program."

### Rationalizing earmarked funds and transparency
- Strategy approved by Cabinet in "September 2023" with recommendations to improve operational efficiency of 16 funds and determine retention or absorption by line ministries.
- Submit amendments to merge redundant funds with line ministries by "end-June 2025 (new structural benchmark)."
- Design communication plan to disseminate approved changes and secure stakeholder buy-in.
- Extend GIFMIS coverage to all spending units and enforce its use for earmarked funds (NHIF, GETFund, Road Fund, District Assemblies Common Fund and IGF-reliant institutions).
- Establish mechanism to prevent earmarked funds from collateralizing receivables.
- Require all earmarked funds to submit audited financial statements consistent with PFM regulations and work to clear audit backlogs.

### Fiscal framework and Fiscal Responsibility Act reforms
- Revamp fiscal rule by adding a debt anchor with broad coverage to control extra-budgetary spending and adopt operational rules (e.g., primary balance or expenditures).
- Clearly define escape clauses and correction mechanisms consistent with international best practices.
- Reform Fiscal Advisory Council to assess realism of Budget macro-fiscal projections and evaluate performance against the fiscal rule, with strong operational independence and adequate resources.
- Submit draft amendments to the Fiscal Responsibility Act (2018) by "end-October 2024 (structural benchmark)."

*IMF staff summary of Ghana program commitments and structural benchmarks as presented in the source PDF.*

### 44. We are finalizing a new fiscal regime framework for extractive industries with support

### We are finalizing a new fiscal regime framework for extractive industries with support from the Fund

### Extractive industries fiscal regime
- Draft Extractive Industry Fiscal Regime bill prepared and undergoing internal review.
- New regime will be coherent with the Amended Fiscal Responsibility Law and aims to:
  - raise sufficient revenue,
  - provide adequate incentives to invest at reasonable cost to both the government and taxpayers,
  - improve transparency and governance in the sector.
- Expectation: submit the bill by end-December 2024 to Parliament.

### Fiscal strategy and fiscal risk statements
- Commit to publish fiscal strategy document and fiscal risk statements consistent with the PFM Regulation and international best practice.

### Revenue administration and tax policy: implementation steps supporting 2024 budget yield
- VAT enforcement on residential accommodations:
  - completed VAT registration of large property developers;
  - made VAT payment a prerequisite for registration of the property;
  - mandated VAT payments through the GRA online portal.
- Started collecting information on property sales from developers on a monthly basis to prevent tax evasion.
- Enhanced audits on large taxpayers of PIT, CIT, and VAT.
- Will publish quarterly compliance report data on the GRA website from June 2024.
- Digital initiatives:
  - launched e-Commerce portal in March 2023;
  - rolling out e-VAT project and collecting/analyzing data from e-platforms;
  - expect to roll out the e-VAT system to large taxpayers by end-June 2024 and another 2000 taxpayers by end-December 2024.

### Medium-term Revenue Strategy (MTRS)
- Cabinet-approved MTRS objectives:
  - broaden the tax base,
  - minimize tax avoidance,
  - ensure a progressive tax system,
  - promote equity and transparency, provide tax certainty and predictability.
- Mid-implementation review scheduled by mid-2025 with Fund support to assess:
  - timeline adherence,
  - yield of adopted reforms,
  - achievement of MTRS objectives,
  - identification of timebound corrective actions if required.

### Taxpayer register cleaning (structural benchmark)
- Project on track to complete and submit report to MoF by end-June 2024.
- Key actions:
  - eliminate duplication of Taxpayer Identification Numbers (TIN);
  - identify a separate active taxpayer list from the pool of registered individuals/entities;
  - eliminate individuals with no payment or filing obligation from the list of registered PIT taxpayers who are not required by law to be registered as PIT taxpayers.
- Developed data quality requirements and a data governance framework.
- IMF TA support to re-engineer business processes for taxpayer registration.
- Cleaning to be completed before migration to the newly procured Integrated Tax Administration System (ITAS).

### Integrated Tax Administration System (ITAS)
- Finalizing ITAS procurement and data migration from existing portals to ITAS by end-June.
- Governance structure to be established (project steering committee, project manager, project team).
- Training plan developed; organizational structure and regulatory framework compatibility reviewed.
- Operationalization approach:
  - step-by-step pilot program;
  - add modules and functionality gradually while running tests.
- Full operationalization of major modules (registration, returns filing and payments) for major tax types by end-December 2024 (structural benchmark).

### Public spending efficiency and transparency
- Comprehensive public expenditure review with the World Bank expected to be finalized by end-June 2025.
- Functional review of selected MDAs to be completed by end-June 2025 to guide public sector wage calibration.
- Objective: create fiscal space for development, social, and climate-related priorities through efficiency gains.

### Recalibrating social spending and sector-specific reforms
- Recalibrate expenditure portfolio of MDAs responsible for social spending to shift toward targeted interventions.
- Conduct comprehensive assessment of public sector wages, including in education and health.
- Education sector actions:
  - review and rationalize the Free Senior High School (SHS) program;
  - continue tertiary education support;
  - take targeted measures to improve foundational learning (e.g., increasing capitation grants);
  - introduce reforms with development partners to improve learning outcomes.
- Health sector actions:
  - enhance effectiveness of National Health Insurance Scheme (NHIS) by increasing coverage, reducing administrative cost, ensuring timely transfers from the consolidated fund, and reviewing package of benefits and tariff structure.

### Wage bill and HR systems
- Integrate HRMIS with GIFMIS and the Payroll system by end-December 2025 to strengthen controls on “ghost names”, promotions, hiring and payroll costs.

### Flagship programs rationalization
- Initiate review of all government flagship programs and publish a rationalization strategy by end-December 2024.
- Rationalization decisions to depend on assessments of efficiency, effectiveness, and value for money.
- For social programs, align spending envelope with SDG targets.

### Fiscal reporting improvements
- Improve timeliness of CAGD Quarterly Financial Statements.
- Start quarterly submission of budget performance by MDAs by end-June 2024 using quarterly CAGD cash reports and expedite GIFMIS rollout to all MDAs.
- Ensure SOEs start submitting financial reports to CAGD.

### Energy sector measures
- Actions to reduce energy sector shortfall, improve transparency in ECG collections/payments, and promote competition:
  - continue quarterly tariff adjustments to reflect exchange rate, inflation, fuel prices, and generation mix changes;
  - publish technical notes within 30 days of decision announcement to explain quarterly tariff decisions;
  - prioritize IPP payments under the revised cash waterfall mechanism and ensure a monthly fixed payment to IPPs for energy purchase;
  - published on PURC’s website the first quarterly audit report of ECG’s single account for Jul-Sep 2023 in February 2024 (structural benchmark) — report accompanied by a qualified opinion and raised issues with access to information during the audit;
  - continue quarterly audits of ECG’s single account and sub accounts, take corrective actions, and ensure next audit for October-December 2023 provides an unqualified opinion;
  - publish by PURC monthly data on collections by ECG (with a 2-month lag), and disbursements to IPPs and SOEs under the CWM after verifications;
  - agreements reached with several IPPs on fixed monthly payments to clear legacy arrears; negotiations with others ongoing;
  - amend legislation to mandate distribution licensees to procure new power generation or enter new PPAs only through competitive tendering;
  - merge all tariff sub-accounts of ECG into a single account for collections and disbursements;
  - develop and operationalize a framework, in consultation with Fund staff, to guide granting of energy sector subsidies by December 2024, including a mechanism to insulate vulnerable populations fully or partially from large tariff increases;
  - review PURC methodology for quarterly adjustment of electricity tariffs with IMF and World Bank support to reduce discretion and ensure timely reflection of macroeconomic developments;
  - conduct a sector-wide audit of SOE finances to identify options to reduce costs and settle outstanding debt while avoiding implications for the government budget by end-December 2024.

### Cocobod viability and reform measures
- Publish Cocobod turnaround strategy approved by Cabinet by end July 2024.
- Amend Cocobod Act (1984) to adopt a framework for setting producer purchase prices to:
  - ensure sufficient revenues for farmers;
  - guarantee revenue stream sufficient to recover Cocobod’s operational and financial costs by end-2024;
  - framework to be finalized in consultation with Fund and Bank staff and require complete medium-term cashflow projections from the Board.
- Producer price policy for 2024 and 2025 seasons:
  - minimum and maximum producer purchase prices to be set at 60-70 percent of the FOB international price (inclusive of LID);
  - this range will be reviewed every two years.
- Initiate functional review of all departments and subsidiaries of the Board by an external consultant to identify cost-cutting scope and implement cost rationalization measures.
- Rationalize quasi-fiscal spending on cocoa roads, fertilizer, and pesticides:
  - reviewed and rationalized existing cocoa road contracts to streamline outstanding contract value from GHS21 billion to GHS6 billion;
  - no new cocoa road construction contract will be awarded;
  - amend Ghana Cocobod Act to prevent the Board from engaging in construction and repair/maintenance of roads.
- Addressing farmgate price increase:
  - recent farmgate price increase of cocoa by 58 percent mid-season;
  - steps include increasing proportion of spot sales at current high market prices and pursuing additional spending rationalization.
- Strengthen MoF financial oversight:
  - establish a cocoa desk at the MoF to limit Cocobod deficit risks;
  - review funding plans regularly and associate with contingency planning;
  - if risks materialize, ensure Cocobod scales down spending to maintain balanced financial position;
  - Cocobod will refrain from mobilizing any non-concessional funding and/or any collateralized funding—except for its annual syndicated loan.

### Governance and anticorruption
- Requested IMF technical assistance to conduct a Governance and Corruption Diagnostic Assessment (ongoing) covering: anti-corruption, rule of law (property rights and contract enforcement), fiscal governance, public financial management, revenue administration, AML/CFT and financial sector regulation. Committed to publishing the Diagnostic Assessment report when finalized.
- Undertake in 2024, with UNODC support, an evaluation of the ten-year National Anticorruption Action Plan (NACAP) that started in 2014; the evaluation and IMF Diagnostic Assessment will inform an updated NACAP to be finalized in early 2025.
- Prepared draft new Conduct of Public Officers Act to address asset declaration system weaknesses; draft Act to be approved by Cabinet in the next few weeks and will introduce provisions to ensure timely declarations and effective verification.
- Continue implementation of recommendations from the Auditor General’s audit of Covid-19 spending; AG office is verifying reported progress with individual ministries and preparing an independent implementation report to be made public by end-June 2024.

### AML/CFT and beneficial ownership (BO)
- Continue strengthening AML/CFT framework following exit from FATF grey list.
- Preparations for GIABA Third Round Mutual Evaluation planned for 2025:
  - started a National Risk Assessment to update ML/TF/PF risk understanding to inform mitigation measures.
- Financial Intelligence Center (FIC) actions:
  - engage, sensitize, train and build capacity of reporting entities on Customer Due Diligence (CDD), risk assessment, current trends and typologies;
  - collaborate with sectoral supervisors for enforcement of targeted financial sanctions.
- Strengthen preventive measures for Designated Non-Financial Businesses and Professions through increased sensitization and capacity building in priority sectors: real estate, casinos, dealers in precious metals and precious stones.
- Beneficial Ownership transparency:
  - implement recent updates from March 2022 to FATF’s R.24;
  - by end-December 2024, significantly improve disclosure of BO for all legal entities predating the Companies Act, 2019 (Act 992);
  - Companies Act, 2019 (Act 992) mandates BO disclosure prior to company incorporation;
  - starting in 2025, systematically apply proportionate and dissuasive sanctions to legal entities failing to comply;
  - take measures to provide and facilitate access to the BO register to all competent authorities and accountable institutions;
  - develop a new system to facilitate timely access to the BO register expected to go live by end of 2024.

*Document: Excerpt from IMF-supported Ghana program text.*

### 62. We are developing a set of coherent and focused policies to boost private investment

### We are developing a set of coherent and focused policies to boost private investment

### Improving the business environment
- Deepen the cross-cutting Business Regulatory Reform (BRR) program to simplify business regulations.
- By end-December 2024, the process of new business registration through the Company Registration system will be fully digitalized.
- By end-December 2024, fully operationalize the construction permitting portal to streamline construction permitting.
- By end-2024, with the support of the World Bank, approve and implement the Regulations of the Private Public Partnership Act and of the Corporate Insolvency and Restructuring Act.

### Attracting FDI
- Amendments to the Ghana Investment Promotion Centre (GIPC) Act to substantially reduce minimum foreign capital requirements will be resubmitted to Parliament by June 2024.
- By end-2024, roll out an e-visa system for all visitors.
- By end-2024, GIPC will introduce an investors grievance mechanism.
- Review local content requirement (LCRs) laws to ensure they do not deter foreign investors and consider replacing them with provisions on Responsible Business Conduct (RBC).
- By end-2025, with the support of the World Bank, enact a new Investment Law to make the legal framework for investors more binding, robust and predictable.

### Export competitiveness and integration into global value chains
- Reduce trade barriers and implement the African Continental Free Trade Area (AfCFTA).
- Ensure compliance with ECOWAS Common External Tariff (CET) obligations regarding exemption of duties for goods traded under the ECOWAS Trade Liberalization Scheme (ETLS).
- Ensure smooth migration from HS 2017 to HS 2022 to avoid unwarranted rejection at the border by customs authority of approved and eligible enterprises.
- By end-December 2024, build full capacity to enable Ghanaian businesses and other economic operators to leverage AfCFTA implementation by:
  - strengthening national institutional and implementation structures and committee;
  - equipping the National Coordinating Office (NCO);
  - recruiting qualified technical staff;
  - installing a robust database as information repository for access to trade information.
- Accelerate trade facilitation through modernization of the Tema Port to reduce clearance times, revise the transshipment regime, invest in container shipping infrastructure, simplify and harmonize import and export procedures, and establish special economic zones to facilitate exports.
- By end-2024, update the 2005 Trade Policy to include current developments and agreements in regional and global trade including trade in services, digital trade and climate change – Trade and Sustainability Development (TSD).
- Crystalize reforms into a five-year Trade Sector Support Programme to guide implementation actions and delivery of results.

### Upskilling our workforce
- Strengthen education and skills training through improved teaching practices (differentiated learning approach), in-service training and supervision of teachers and schools, provision of differentiated learning materials, and national assessment of learners.
- Make the Free Senior High School program more efficient and strengthen uptake by the poorest households; provide support for out-of-school children to access formal education and skills training.
- Strengthen skills training programs by expanding access to technical vocational education and training, apprenticeship programs, strengthening digital, STEM and job-related skills training, and systematically collaborating with the private sector to identify critical skills gaps.
- Continue promoting entrepreneurship through initiatives such as the YouStart Programme to create jobs and enable youth to harness local opportunities.

### Streamlining sectoral and industrial policies
- Assess sectoral policy initiatives to make support to specific industries or businesses more efficient.
- Reorient and launch Planting for Food and Jobs program (PfJ 2.0) to rationalize fertilizer subsidies, improve land access and strengthen support for land development.
- Expand Economic Enclave Projects to develop medium to large scale agricultural production and agro-processing activities.
- By the end of the second quarter 2024, Cabinet will approve a new Industrial Parks and Special Economic Zones Policy, and a new Special Economic Zones Act will be adopted, along with related regulations.
- Address sustainable long-term financing of the “one-district, one-factory” program to boost value-addition, trade and private sector investment and limit exposure of banks to further NPL increase related to manufacturing projects provided short-term funds for long-term capital investment.
- Actively support strategic industries: Auto Assembly and Auto Components Manufacturing, Textiles and Garments Manufacturing and Pharmaceutical Manufacturing to accelerate growth-oriented investment expansion and development of local supply chains.

### Improving access to finance
- Improve private sector access to finance by applying a sound supervision framework to financial institutions, restoring capital buffers in institutions affected by the debt restructuring, ensuring a stable inflation environment that allows lower interest rates, and maintaining strict fiscal discipline to limit crowding out of private sector financing.
- With support from the World Bank, the European Investment Bank and the KfW, operationalize the Development Bank Ghana to provide wholesale long-term funding to financial institutions to on-lend to creditworthy enterprises in agribusiness, manufacturing, and high value services.
- Implement new credit reporting regulations to improve the quality of credit infrastructure by expanding sources of data used by credit bureaus, leveraging the new biometric ID system and enhancing data submissions rules, quality requirements, and data protection.
- Operationalize the SME Growth and Opportunity Fund to address SMEs' financing challenges.

### Encouraging digitalization
- Expand broadband mobile coverage by improving enabling policies such as active infrastructure sharing and applying tech-neutrality in spectrum bands.
- Improve basic digital skills in school and fill the gap of advanced digital skills through tertiary education, bootcamps and technical and vocational training.
- Expedite implementation of government digital initiatives such as the National ID, digital address systems, land records digitization, Ghana.gov and consolidate them into a single stop shop for users.

### Program monitoring and communication
- Program to be monitored on a semi-annual basis through quantitative performance criteria, continuous performance criteria related to the Article VIII, a monetary policy consultation clause, indicative targets, and structural benchmarks.
- A Memorandum of Understanding between the government and the BoG has been established to set responsibilities for servicing financial obligations to the Fund.
- The authorities will continue strengthening statistics and bolstering the communication strategy, launching a regular newsletter and a regular forum to explain policies and reforms under the program to relevant stakeholders.

### Selected structural benchmarks and deadlines (policy implementation and governance)
- Expand GIFMIS infrastructure to 265 IGF-reliant institutions with all available functionalities — End-December 2023 — Met.
- Publish PURC’s final report of the first quarterly audit of ECG's single account — End-February 2024 — Met.
- BoG escalates remedial measures against banks not complying with one-third recapitalization and non-negative CAR requirements in 2023 — End-March 2024 — Met.
- BoG and MoF design and begin implementation of a credible plan to address NIB's solvency challenges by end-2024 — End-March 2024 — Not met, implement with delay.
- Develop and submit to cabinet a centralized inventory of all ongoing and planned public investment projects — End-March 2024 — Met.
- Cabinet approves amendments to the BoG Act to address IMF safeguard assessment recommendations — End-May 2024 — Not Met.
- Present to the BoG Board a risk assessment report of the gold-for-oil program and an exit strategy — End-June 2024.
- GRA shares final report of project cleaning taxpayer register and ledgers — End-June 2024.
- Enable “Blanket Purchase Agreement” functionality in GIFMIS for multi-year commitments — End-September 2024.
- Submit draft amendments to the Fiscal Responsibility Act (2018) to parliament — End-October 2024.
- Operationalize the Integrated Tax Administration System (procurement, data migration, VAT/CIT/PIT functionality) — Reset to end-December 2024.
- BoG finalize ToR for special review of NIB by an international firm; special inspection completed by end-2024 — End-July 2024.
- Adopt a revised BoG reference rate setting methodology — End-August 2024.
- Complete diagnostic of cost-effectiveness of post-CoD projects and finalize prioritization strategy — End-August 2024.
- Fully integrate GHANEPS with GIFMIS to ensure procurement approvals only for projects with approved budgets and allotments — End-December 2024.
- Following the special review, BoG and government to prepare a forward-looking restructuring plan for NIB — End-March 2025.
- BoG implements remedial measures against banks that have not complied with two-thirds recapitalization and non-negative CAR requirements by end-December 2024 — End-March 2025.
- MoF to bring onboard 549 MDAs and MMDAs spending unit accounts into GIFMIS — End-March 2025.
- BoG and government to design a strategy to ensure all state-owned banks adopt sound governance principles and risk management systems — End-April 2025.
- Adopt necessary legislation to implement the government's strategy to streamline statutory funds (end-September 2023 SB) — End-June 2025.

*Source: Excerpt from the IMF-supported program documentation for Ghana.*

### 1. This Technical Memorandum of Understanding (TMU) sets out the understandings regarding

### 1. This Technical Memorandum of Understanding (TMU) sets out the understandings regarding

### Purpose and scope
- Sets out the understandings regarding the definitions of the performance criteria (PCs), indicative targets (ITs), and consultation clauses applied under the Extended Credit Facility, as specified in the authorities’ Letter of Intent (LoI) and Memorandum of Economic and Financial Policies (MEFP) of June 13 and their attached tables.
- Describes methods to be used in assessing the program’s performance and the information requirements to ensure adequate monitoring of the targets.
- Exchange rates for program purposes are specified in the Table below (table provided in source).
- The gold price for the purpose of the program is US$ 1,826.92 per ounce (as per Bloomberg data as of February 2023).

### Continuous performance criteria applicable to all Fund arrangements
- i. no imposition or intensification of restrictions on the making of payments and transfers for current international transactions;
- ii. no introduction or modification of multiple currency practices;
- iii. no conclusion of bilateral payments agreements that are inconsistent with Article VIII of the IMF Articles of Arrangement;
- iv. no imposition or intensification of import restrictions for balance of payments reasons.
- These performance criteria will be monitored continuously.
- The revision of the BoG reference rate methodology (end-August 2024 SB) and the introduction of competitive price-based FX spot auctions (MEFP¶38), being conducted in consultation with IMF staff, would not constitute modification of multiple currency practices (MCPs).

### A. Net International Reserves (NIR) of the Bank of Ghana — Floor (Millions of U.S. Dollars)
- Definition:
  - NIR = reserve assets minus short-term foreign-currency liabilities and liabilities to the Fund.
  - All values not in U.S. dollars are to be converted to U.S. dollars using the program exchange rates and gold price defined in paragraph 2.
- Reserve assets (RA) include: Bank of Ghana holdings of monetary gold, SDRs, foreign currency cash, foreign currency securities, deposit abroad, and the country’s reserve position at the Fund.
- Excluded from RA: assets that are pledged, collateralized, or otherwise encumbered; claims on residents; precious metals other than gold; assets in nonconvertible currencies; and illiquid assets. Encumbered assets include Ghana Petroleum Heritage and Stabilization Fund and Bank of Ghana deposits with Ghana International Bank London.
- Short-term foreign-currency liabilities: Bank of Ghana contractual foreign-currency obligations to residents and nonresidents scheduled to come due during the 12 months ahead. They comprise Deposits of International Institutions, Liabilities to International Commercial Banks, FX Swaps with non-resident and resident banks, foreign currency deposits held at the BoG.
- Liabilities to the Fund include all outstanding use of IMF credit, including IMF budget support for the MoF. Liabilities to the Fund exclude SDR allocations.
- Note: This definition differs from the one reported in the Balance of Payments and Monetary Survey which reflects a more traditional definition of foreign assets and liabilities based on a residency basis.
- Adjustors:
  - NIR floors adjusted upward for any excess of budget grants, loans, and foreign exchange received in the context of the sales of 5G spectrum licenses, relative to the program baseline, except where this financing is used to repay outstanding domestic arrears at a more rapid pace than programmed.
  - NIR floors adjusted downward for any shortfall in budget grants and loans relative to the program baseline.
  - The NIR floors will be adjusted upwards by the full amount of the debt service payments on commercial claims in the restructuring perimeter below the amounts in the program baseline.

### B. Bank of Ghana Claims on the Central Government and Public Entities — Cumulative Ceiling (Billions of Cedis)
- Definition:
  - Central government comprises central government, all special funds (including the Ghana Education Trust Fund, the Road Fund, the District Assemblies Common Fund, the National Health Insurance Fund and Mineral Income Investment Fund), and all subvented and other government agencies classified as government in the BoG Statement of Accounts (SOA).
  - SSNIT and public enterprises, including Cocobod, are excluded from the definition of central government.
  - Outstanding gross credit to central government and specified public entities by the BoG for program monitoring purposes is defined as the change in the total amount, measured from the start of the program and net of the stock adjustment from the debt operation, of: (i) all BoG loans and advances to central government and public entities; (ii) all central government and public entities overdrafts; (iii) the face value for all outstanding Government of Ghana treasury bills, notes and bonds purchased by BoG in the primary and the secondary market.
  - Includes called guarantees given by BoG for operations between the central government or public entities and a third party.
  - Excludes: (i) BoG holdings of Government of Ghana T-bills as collateral from commercial banks; (ii) BoG reversible market transactions involving Government of Ghana securities; (iii) BoG loans to the central government from the on-lending IMF resources through the SDR allocations and PRGT loans.

### C. Present Value (PV) of Newly Contracted or Guaranteed External Debt by the Central Government and Public Entities — Cumulative Ceiling (Millions of U.S. Dollars)
- Definition:
  - External debt defined on a residency basis.
  - The definition of “debt” follows paragraph 8(a) of the 2014 Guidelines on Public Debt Conditionality in Fund Arrangements (Executive Board’s Decision No.15688-(14/107)).
  - Forms of debt include: (i) loans; (ii) suppliers’ credits; (iii) leases (PV at inception of all lease payments expected during the agreement, excluding operation/repair/maintenance payments).
  - Arrears, penalties, and judicially awarded damages arising from failure to make contractual payments that constitute debt are debt.
- Coverage:
  - Ceiling applies to cumulative PV of new external debt contracted or guaranteed by the central government and listed public entities (explicit list provided in ¶10).
  - Applies to debt and commitments contracted or guaranteed for which value has not yet been received, including private debt with official guarantees.
- Contracting:
  - A debt is considered contracted when all conditions for its entry into effect have been met in accordance with contract terms and national legislation.
  - Contracting of credit lines with no predetermined disbursement schedules or with multiple disbursements is considered contracting of debt.
- Exclusions from the ceiling:
  - (i) loans and bonds stemming from restructuring, rescheduling or refinancing of external debt;
  - (ii) renewal of an existing suppliers’ credit;
  - (iii) rollover of a credit line;
  - (iv) short-term debt including suppliers’ credit and credit lines with a maturity of less than 6 months for public entities mentioned in ¶10;
  - (v) debt contracted from the IMF, World Bank and AfDB;
  - (vi) Government of Ghana securities issued in domestic currency, placed in the domestic primary or secondary markets, and held by non-residents.
- Guaranteed debt: explicit promise by the central government and public entities to pay or service a third-party obligation.
- PV calculation and discount rate:
  - PV of debt at signing is calculated by discounting the future stream of payments of debt service due on this debt.
  - The discount rate used is the unified discount rate of 5 percent set forth in Executive Board Decision No. 15248-(13/97).
- Concessionality:
  - A debt is concessional if it has at least a grant element of 35 percent.
  - Grant element = difference between PV debt and nominal value, expressed as a percentage of nominal value.
  - For debts with a grant element equal to or below zero, the PV will be set equal to the nominal value.
- Variable-rate loans:
  - For loans with variable interest rate = benchmark interest rate + fixed spread, PV calculated using the program reference rate plus the fixed spread (in basis points) specified in the loan contract.
  - Program reference rate for the three-month U.S. Secured Overnight Financing Rate (SOFR) is 2.97 percent and will remain fixed for the duration of the program.
  - Spread of three-month JPY Tokyo Interbank Offered Rate (TIBOR) over three-month USD SOFR is -300 basis points.
  - Spread of three-month U.K. Sterling Overnight Index Average (SONIA) over three-month USD SOFR is equal to 50 basis points.
  - For interest rates on currencies other than Euro, JPY, and GBP, the spread over three-month USD SOFR is 0 basis points.
  - Where variable rate is linked to a benchmark other than three-month USD SOFR, a spread reflecting the difference between the benchmark rate and three-month USD SOFR (rounded to the nearest 50 bps) will be added.
- Reporting:
  - MOF will immediately report to IMF staff details of any new external loans before being contracted or guarantees before being issued by the central government and public entities mentioned in ¶10.
  - MOF to provide, on a monthly basis and within 30 days from the end of each month, detailed data on all new concessional and non-concessional external debt contracted or guaranteed by the central government and public entities mentioned in ¶10. Information should include: (i) amounts contracted or guaranteed; (ii) currencies; (iii) terms and conditions, including interest rates, maturities, grace periods, payments per year, commissions and fees, and collaterals.
- Adjustors:
  - PV of newly contracted or guaranteed external debt will be adjusted upward for excesses in contracted concessional project loans relative to the stated baseline (table provided in source).

### D. Primary Fiscal Balance of the Central Government, Commitment Basis — Cumulative Floor (Millions of Cedis)
- Definition:
  - Primary fiscal balance is cumulative from the beginning of the fiscal year and measured as the difference between the primary balance on cash basis from the financing side and the net change in the stock of payables (“outstanding payments”) of the central government reported in GIFMIS, including payables of statutory/earmarked funds (SFs) defined as outstanding payments from the consolidated funds to the SFs.
  - Starting in 2024, for the four SFs using GIFMIS for budget execution (Road Fund, NHIF, GETFund and DACF), payables are computed as any outstanding payments of these funds to their suppliers, contractors, service providers, and other counterparts. For remaining SFs, payables represent outstanding payments from the consolidated fund to these SFs.
  - A positive net change in the stock of payables means more payables are built up than cleared over the period considered (so the primary balance on a cash basis is stronger than the primary balance on a commitment basis).
  - The program’s fiscal primary balance excludes the financial sector cost, defined as government support to strengthen the financial sector as envisaged under the program.
- Measurement:
  - Primary balance on cash basis = sum of net financial transactions of the central government—comprising net foreign borrowing (¶20), net domestic financing (¶21), receipts from net divestitures and net drawing out of oil funds, minus domestic and external interest payments.
  - Excludes financing for the financial sector recapitalization.
- Definitions:
  - Net foreign financing = sum of project and program loans by official creditors and commercial external borrowing, minus amortization due.
  - Net domestic financing = change in government deposits plus domestic debt issuance proceeds, minus domestic debt amortization due.
- Adjustors:
  - Primary balance floor for March 2024–June 2025 will be adjusted for excesses and shortfalls in disbursed concessional project loans relative to program assumptions (baseline table provided in source).
  - Primary balance floor will be adjusted upward by the full amount of non-tax revenue proceeds stemming from the sale of 5G Spectrum licenses.

### E. Non-Accumulation of External Debt Payments Arrears by the Central Government and the Bank of Ghana — Continuous Ceiling (Millions of U.S. Dollars)
- Definition:
  - External payment arrears accrue when payments such as interest or amortization on debts of the government (as defined in ¶8) to non-residents are not made within the terms of the contract, taking into account all applicable grace periods.
  - Excludes arrears relating to debt subject to renegotiation (dispute or ongoing renegotiation) or rescheduling.
  - This performance criterion will be monitored on a continuous basis.

### F. Newly Contracted Collateralized Debt by the Central Government and the Public Entities — Cumulative Zero Ceiling
- Definition:
  - Collateralized debt is any contracted or guaranteed debt that gives the creditor rights over an asset or revenue stream that would allow it, if the borrower defaults on its payment obligations, to rely on the asset or revenue stream to secure repayment of the debt.

*IMF staff summary of TMU text provided in the source PDF chapter.*

### 26. The performance criterion (ceiling) applies to debt contracted or guaranteed by the central

### 1ghaea2024002-print-pdf - 26. The performance criterion (ceiling) applies to debt contracted or guaranteed by the central

### Performance criterion (ceiling): coverage
- The performance criterion (ceiling) applies to debt contracted or guaranteed by the central government and the following public entities:
  - (i) Tema Oil Refinery;
  - (ii) Ghana National Petroleum Company;
  - (iii) Ghana National Gas Company;
  - (iv) Volta River Authority;
  - (v) Electricity Company of Ghana;
  - (vi) Ghana Grid Company Ltd (GRIDCO);
  - (vii) Ghana Water Company Limited;
  - (viii) Ghana Infrastructure Investment Fund (GIIF);
  - (ix) Daakye. PLC;
  - (x) Energy Sector Levy Act (ESLA). PLC;
  - (xi) Asanti Gold Corporation;
  - (xii) Cocobod, excluding the annual syndicated trade financing facility;
  - (xiii) Ghana Integrated Aluminium Development Corporation (GIADEC);
  - (xiv) Bulk Oil Storage and Transportation (BOST).

- Period/test-date line as presented in the source (preserve exact formatting and values):
  - Dec-23Mar-24Jun-24Sep-24Dec-24Mar-25Jun-25
  - 272.482.6165.1254.9359.092.5184.9

### Monetary policy consultation clause
- Consultation bands are specified around the projected 12-month rate of inflation in consumer prices (as measured by the headline consumer price index (CPI) published by the Ghana Statistical Service) in the Performance Criteria table in the MEFP.
- If the observed 12-month rate of CPI inflation falls outside the lower or upper outer bands specified in the PC table for the relevant test dates:
  - The authorities will complete a consultation with the IMF Executive Board focusing on:
    - (i) the stance of monetary policy and whether the Fund-supported program remains on track;
    - (ii) the reasons for deviations from the program targets, taking into account compensating factors; and
    - (iii) proposed remedial actions if deemed necessary.
  - Access to Fund resources would be interrupted until the consultation takes place and the relevant program review is completed.
- If the observed 12-month rate of CPI inflation falls outside the inner bands specified for the end of each quarter in the Performance Criteria table:
  - The authorities will conduct discussions with Fund staff.

### Central bank FX intervention and indicative targets
- Central bank Foreign Exchange Intervention (FXI) is defined as the total of BoG FX sales to commercial banks in:
  - (i) the spot market;
  - (ii) the regular FX auction;
  - (iii) the special FX auction including for fuel distributors.

### Indicative targets — Non-Oil Public Revenue, Cumulative Floor (Millions of Cedis)
- Definition of central government total non-oil revenue:
  - Includes total tax revenue—all revenue collected by the GRA, whether they result from past, current, or future obligations such as Direct Taxes (taxes on income and property), Indirect Taxes (excises, VAT, National Health Insurance Levy (NHIL), GETFund Levy, Covid-19 Health Levy, E-Levy, and Communication Service Tax (CST)), and Trade Taxes.
  - Includes total non-tax revenue—including IGFs retention, Fees and Charges, Dividend/interest and profits from oil and others, Surface rental from oil/PHF interest, property rate collection and yield from capping policy.
  - Excludes grants, oil revenue as defined in ¶30, social security contributions and ESLA proceeds.
  - Total non-oil revenue is recorded on a cash basis.
- Oil revenue (¶30) definition:
  - The central government’s tax and non-tax net proceeds from the sale of oil, excluding any revenue allocated to Ghana National Petroleum Corporation (GNPC).
- Adjustor (¶31):
  - Total non-oil revenue floor will be adjusted upward for the full amount of the non-tax revenue proceeds of the sale of 5G Spectrum licenses.

### Ceiling on disbursement of contracted but undisbursed external project loans (pre-end-December 2022)
- The ceiling applies to the total contracted but not yet disbursed project loans to the central government from official external and commercial creditors.
- The ceiling includes disbursements resulting from undisbursed projects contracted before the OCC cut-off date.
- External debt is defined as in paragraph 9 above (definition not reproduced here).

- Reporting requirement:
  - Detailed data on the total amount of contracted but not yet disbursed external project loans of bilateral creditors pre-OCC cut-off date will be provided on a quarterly basis, within 30 days from the end of each quarter, including amounts, currencies, creditors, and project names.

### Social spending, cumulative floor (Millions of Cedis)
- Definition (¶34):
  - The expenditure floor on poverty-reducing social programs of the central government includes:
    - disbursement of the National Health Insurance Fund used to pay for medical claims, essential medicine, and vaccines;
    - budget release from the central government to the respective line ministries for the Ghana School Feeding Program, the Livelihood Empowerment Against Poverty Program, and the Capitation Grant.
  - Measured expenditure excludes all donor-supported expenditure.

### Net change in stock of payables (central government and payables to IPPs), ceiling (Millions of Cedis)
- Definition (¶35):
  - Stock of payables = sum of:
    - (i) stock of payables of the central government reported by CAGD at the end of each quarter (covers stock of payables of all MDAs—including MDA’s unreleased claims—and consolidated stock of payables of all statutory funds and selected IGFs: National Pension and Regulatory Authority, National Petroleum Authority, National Communication Authority, Gaming Commission, Securities and Exchange Commission);
    - (ii) stock of energy sector payables (for program monitoring in 2024, energy sector payables comprise energy-sector-related outstanding payments of the ECG and GNPC (including those to be paid by the MoF) to power generators (both IPPs and energy State Owned Enterprises) and fuel suppliers).
  - Payables denominated in US$ will be assessed at the end of period exchange rate computed as the average daily exchange rate in the last month of the period.

### Provision and sharing of data with the Fund
- Data with respect to variables subject to performance criteria and indicative targets will be provided to Fund staff on a monthly basis with a lag of no more than eight weeks (except for select data where reporting lag is explicitly specified in Table 1).
- The authorities will transmit promptly to Fund staff any data revisions.
- For any relevant information (and data) not specifically defined in the memorandum, the authorities will consult with Fund staff.
- The authorities will share any prospective debt agreements relevant for program monitoring (see Section C, E, and F or quantitative performance criteria) with Fund staff before submission to cabinet and before contracting.

### Table 1: Selected reporting items and periodicity (high-level extract)
- Fiscal data (MoF):
  - Central budget operations for revenues, expenditures and financing: Monthly, within six weeks of the end of each month.
  - Stock and quarterly flows of buildup/clearance of GIFMIS payables: Quarterly, within six weeks of the end of each quarter.
  - Stock of payables of the central government prepared by CAGD: Quarterly, within six weeks of the end of each quarter.
  - Stock and quarterly flows of unreleased claims: Quarterly, within six weeks of the end of each quarter.
  - Stock and quarterly flows of payables to IPPs: Quarterly, within six weeks of the end of each quarter.
  - Updated list of (prioritized) projects to be financed by non-concessional and concessional loans: Monthly, within six weeks of the end of each month.
  - Cash flow of the central government and cash flow projections: Monthly, within six weeks of the end of each month.

- Monetary data (BoG):
  - Detailed balance sheet of the monetary authorities including monetary bridge data: Monthly, within four weeks of the end of each month.
  - Monetary survey detailing consolidated balance sheet of commercial banks: Monthly, within six weeks of the end of each month.
  - Summary position of central government and public entities committed and uncommitted accounts at BoG, and total financing from BoG: Monthly, within four weeks of the end of each month.
  - Composition of banking system and nonbanking system net claims on central government: Monthly, within four weeks of the end of each month.
  - Debt registry showing structure and holders of domestic government debt, at face value and at discount; similar table for holders of treasury bills for open market operations: Monthly, within four weeks of the end of each month.
  - Itemized overview of outstanding liquidity support granted to financial institutions (aggregate and institution-level): Monthly, within four weeks from the end of each month.
  - Inflation expectation survey data: Bi-monthly, within four weeks after the survey is collected.
  - Detailed monthly inflation data including BoG’s various measures of core inflations, imported vs. locally produced good inflation, tradable and non-tradable good inflation: Monthly, within four weeks from the end of each month.
  - Monthly business and consumer confidence indices: Monthly, within four weeks from the end of each month.

- Financial market data (BoG):
  - Weekly gross international reserves and net international reserves: Weekly, within a week of the end of each week.
  - Stock of BoG FX swaps, FX loans, and encumbered assets (with corresponding loans/derivatives for encumbered assets): Weekly, within a week of the end of each week.
  - Principal and interest payment of BoG swaps, FX loans, and encumbered assets: Weekly, within a week of the end of each week.
  - Monthly BoG FX Cash Flow Projection (realized monthly cash flow and projection): Monthly, within a week of the end of each week.
  - Daily computations for the BoG local-currency interbank market rate, including all transactions used to derive it: Weekly, within a week of the end of each week.
  - Daily computations for the BoG reference exchange rate, including all transactions used to derive it: Weekly, within a week of the end of each week.
  - Daily BoG FX sales, including direct sales to government and government entities, bilateral market support through the interbank market, and FX auctions (amount and exchange rate of each transaction): Weekly, within a week of the end of each week.
  - Bank-to-bank and BoG-and-bank FX transactions in the interbank market (transaction amount and exchange rate of each transaction): Weekly, within a week of the end of each week.
  - Bi-weekly FX auction results (amount and rate of submitted bids, amount and rate of accepted bids, banks or sector of winning bidders if known): Monthly within two weeks of the end of each month.

- Banking sector and non-bank financial institutions (BoG):
  - Financial sector indicators at aggregate and bank level including Net Open FX position and FX liquidity position at bank-by-bank level: Monthly, within four weeks from the end of each month.
  - Dividend payment by banks: Quarterly, within four weeks form the end of each quarter.

- Balance of payments (BoG):
  - Monthly oil, gas, and gold productions at aggregate and by mine/field level: Monthly, within four weeks from the end of each month.
  - Monthly cocoa production and exports: Monthly, within four weeks from the end of each month.
  - Monthly fuel imports: Monthly, within four weeks from the end of each month.
  - Monthly imports of fertilizer, and essential and non-essential foods: Monthly, within four weeks from the end of each month.
  - Monthly services, credit and debit: Monthly, within four weeks from the end of each month.
  - Export and import data on value, volume, and unit values, by major categories and other major balance of payments variables: Quarterly, with a maximum lag of two months.

- External and domestic debt data (MoF):
  - Total debt stock of the central government, Daakye, ESLA, GIADEC, Cocobills, and central government-guaranteed debt by creditor: loan-by-loan database for external debt and by tenor for domestic debt: Monthly, within four weeks from the end of each month.
  - Total debt service due and debt service paid by creditor (perimeter: central government, Daakye, ESLA, GIADEC, Cocobills, and central government-guaranteed debt): Monthly, within four weeks from the end of each month.
  - Information on the concessionality of all new external loans contracted by the central government, Daakye, ESLA, GIADEC, or with a central government guarantee: Monthly, within four weeks from the end of each month.
  - Short-term liabilities to nonresidents (maturity in one year or less), including overdraft positions and debt owed or guaranteed by the government or the BoG: Monthly, within four weeks from the end of each month.
  - Detailed information (including amounts, currencies, creditors, and project names) on total contracted but not yet disbursed external project loans of official bilateral and commercial creditors pre-OCC cut-off date: Quarterly, within 30 days from the end of each quarter.

- Quarterly financial statements of main state-owned enterprises (listed entities):
  - (i) Tema Oil Refinery;
  - (ii) Ghana National Petroleum Company;
  - (iii) Ghana National Gas Company;
  - (iv) Volta River Authority;
  - (v) Electricity Company of Ghana;
  - (vi) GRIDCO;
  - (vii) Ghana Water Company Limited.
  - Frequency: Quarterly, within three months of end of quarter.
- Quarterly financial statements of GIIF: Quarterly, within three months of end of quarter.
- Annual financial statements of main state-owned enterprises (same list as quarterly): Annual, within six months of end of year.

- Electricity pricing (Ministry of Energy):
  - Data on tariff structure and cost of producing electricity: Quarterly, within four weeks of the end of each quarter.
  - Electricity grid losses (transmission losses (Gridco) and distribution losses (ECG and Nedco)) — monthly reporting timelines indicated in the source.

- Petroleum pricing (Ministry of Energy):
  - (i) a breakdown of costs, including ex-refinery price, duties, levies, and margins, for each individual petroleum product: Bi-weekly, within two days of the completion of the pricing review.
  - (ii) the indicative maximum price approved in the bi-weekly review of petroleum pricing for each individual petroleum product.

- Bills’ recoveries (ECG and Nedco): Monthly, within six weeks from the end of each month.

### Debt sustainability analysis (DSA) — key findings (excerpt)
- The DSA is prepared jointly by IMF and World Bank staff (June 14, 2024).
- Risk of external debt distress: In debt distress.
- Overall risk of debt distress: In debt distress.
- Granularity in the risk rating: Unsustainable.
- Application of judgment: No.
- Progress on debt restructuring:
  - Authorities completed the domestic debt restructuring last year.
  - Significant progress in discussions with Ghana’s Official Creditor Committee (OCC) under the G20 Common Framework.
  - Agreement reached with the OCC on a Memorandum of Understanding codifying a debt treatment consistent with IMF-supported program parameters.
  - Pending completion of ongoing external commercial debt restructuring in line with IMF-supported program parameters, Ghana remains in debt distress and debt remains unsustainable.
- Arrears:
  - Against the background of the external debt service suspension announced by the authorities in December 2022, Ghana accumulated around US$ 2.6 billion of external arrears to bilateral and commercial creditors in 2023.
- Baseline DSA results (high-level):
  - Under the baseline (which accounts for domestic debt restructuring outcome and agreement with OCC but does not incorporate impact of contemplated restructuring of external commercial claims):
    - The present value (PV) of external debt-to-GDP breaches its threshold until 2027.
    - External debt service-to-revenues exceeds its thresholds throughout the full-time horizon of the DSA.
    - External debt service-to-exports ratio breaches its threshold from 2032 to 2034 and later from 2040 to 2043.
    - PV of debt-to-exports ratio remains below its threshold under the baseline throughout the full-time horizon of the DSA.
    - PV of public debt-to-GDP (reflecting domestic debt restructuring outcome and bilateral debt treatment agreed with the OCC) breaches its 55 percent benchmark until 2034.
  - Stress test results:
    - A combined contingent liability shock would put overall public debt well above the current unsustainable trajectory throughout the full DSA horizon.
    - Debt ratios are sensitive to commodity prices, exports and exchange rate shocks.
- Policy support:
  - Authorities’ reform efforts are supported under the IMF’s ECF arrangement and the World Bank’s DPO series, with debt management reforms remaining an integral part of the reform package.

*The Debt Sustainability Analysis (DSA) was prepared by the staffs of the International Monetary Fund and the International Development Association, in consultation with the authorities. June 14, 2024.*

### 1.      The Debt Sustainability Analysis (DSA) covers public and publicly guaranteed (PPG) debt of

### 1ghaea2024002-print-pdf - 1.      The Debt Sustainability Analysis (DSA) covers public and publicly guaranteed (PPG) debt of

### Debt coverage
- DSA covers public and publicly guaranteed (PPG) debt of the central government, with additional important liabilities of the public sector.
- Included explicitly guaranteed and certain implicitly guaranteed SOE debt:
  - Energy Sector Levy Act (ESLA) debt in the energy sector.
  - Ghana Educational Trust Fund (GETFund/Daakye) debt for education infrastructure.
  - Debt related to the financing of infrastructure projects by Sinohydro.
  - Gross debt of Cocobod — one of the largest SOEs operating on non-commercial terms and largely engaging in quasi-fiscal activities.
- Stock of domestic arrears to suppliers estimated at 6.3 percent of GDP at end-2023 is included in the DSA stock of debt.
- Local governments are not able to borrow and are therefore not included in the debt coverage.
- Nonresident holdings of domestic debt: decreased from $4.8 billion in 2021 (6.2 percent of GDP; 14.3 percent of public external debt) to $1.7 billion in 2023 (2.3 percent of GDP).

### Fiscal costs and sectoral losses affecting debt
- Financial sector recapitalization:
  - Fiscal cost estimated to have reached 7.1 percent of GDP over 2017-21.
  - Authorities issued recapitalization bonds in December 2023 to support undercapitalized banks.
  - Total amount of recapitalization included in the DSA baseline is still GHS 22 bn (equivalent to 2.6 percent of 2023 GDP).
  - Additional recapitalization costs are expected in the coming years.
- Energy sector:
  - Government made budgetary transfers to cover sector annual shortfalls averaging 1.7 percent of GDP between 2019 and 2021.
  - Accumulated arrears to independent power and gas producers (IPPs) of 2.8 percent of GDP at end-2023.
  - DSA baseline assumes the government will continue to cover annual shortfalls with budget transfers going forward.

### Contingent liabilities and tailored stress tests
- Remaining potential contingent liabilities from the financial sector, SOEs and PPPs are modeled in tailored stress tests.
- Stress-test shocks assume an increase of PPG debt by adding:
  - 2 percent of GDP in non-guaranteed SOE debt (note: this captures non-guaranteed SOE debt not already included in baseline).
  - 5 percent of GDP stemming from further financial sector costs.
  - 2.4 percent of GDP, the equivalent to 35 percent of the outstanding public private partnership (PPP) arrangements.
- Text Table 1 summary (used for analysis):
  - Other subsectors added: SoE's debt (guaranteed and not guaranteed by the government) 1/2 percent of GDP2
  - PPP: 35percent of PPP stock 2.4
  - Financial market (default value): 5 percent of GDP 5
  - Total (2+3+4+5) (in percent of GDP): 9.4
- Footnotes:
  - In line with LIC DSF GN (appendix III), Cocobod’s total gross debt is included given fiscal risks from extra-budgetary spending; this excludes intra-year short-term syndicated trade credit contracted and reimbursed annually within cocoa season.
  - End-2023 domestic arrears amount to 6.3 percent of GDP — of which 2.8 percent of GDP constitute unpaid bills to IPPs; remaining arrears are unpaid bills to other domestic suppliers. DSA baseline assumes repayments over 5 years except for some IPPs with specified repayment plans.

### Debt developments and profile
- Crisis drivers:
  - Compounded effects of COVID-19, tightening global financial conditions, and geopolitical conflicts caused a deep economic and financial crisis.
  - Loss of international capital market access in late 2021; increasing difficulties rolling over domestic debt and central bank liabilities; increased reliance on monetary financing by the Bank of Ghana; acute crisis prompted request for IMF support in mid-2021 and public debt restructuring launched December 2022.
- Fiscal deterioration and recent improvements:
  - Primary deficit on commitment basis: more than 11 percent of GDP in 2020; 4.8 percent in 2021; 4.3 percent in 2022.
  - Rising interest payments to more than 7 percent of GDP brought overall fiscal deficit to 12.0 percent of GDP in 2021 and 11.7 percent of GDP in 2022.
  - Primary deficit reduced by 4 percentage points to 0.3 percent of GDP in 2023.
  - On a cash basis, primary balance improved from a 9.0 percent of GDP deficit in 2020 to a 0.1 percent of GDP surplus in 2023.
- Public debt levels and composition:
  - Public debt increased from 63 percent of GDP in 2019 to 92.7 percent of GDP at end-2022.
  - Domestic debt reached 50 percent of GDP in 2022, of which 16 percent of GDP was held by the Bank of Ghana.
  - Public external debt stood at 43.3 percent of GDP in 2022.
  - In 2023, debt stock decreased to 82.9 percent of GDP, mainly due to Domestic Debt Exchange effects and erosion of domestic debt stock by inflation.
- Liquidity and debt-service metrics:
  - Debt service-to-revenue ratio: reached an all-time high of 127 percent in 2020; declined to 117.5 percent in 2022.
  - Before external debt service suspension announced in December 2022, private external creditors accounted for 69 percent of external debt service payments in 2022; bilateral creditors accounted for 20 percent.
  - Gross financing needs (GFN) reached 19.5 percent of GDP in 2022 (market financing risks benchmark is 14 percent). GFN tensions eased in 2023 due to external debt service suspension.
- Borrowing costs and maturity:
  - Domestic debt increased from 24 percent of GDP in 2019 to 50 percent of GDP at end-2022.
  - Effective interest rate for government debt: 10.8 percent in 2021 to 11 percent in 2022.
  - Average time to maturity of public debt dropped from 8.2 years in 2021 to 7.6 years in 2022.
  - Domestic debt service accounted for 81.7 percent of the public debt service burden in 2022.
  - T-bill rates rose to close to 30 percent, consistent with the BoG policy rate.
  - Since December 2022 restructuring announcement, authorities relied mainly on multilateral external financing and domestic T bills issuance.
- Policy responses and reforms:
  - Macroeconomic policy adjustments: accelerated fiscal consolidation, tightened monetary policy (including eliminating monetary financing), limited foreign exchange interventions.
  - Government Post COVID-19 Program for Economic Growth (PC-PEG) initiated reforms to underpin durable adjustment, build resilience and foster inclusive growth.
  - Comprehensive debt restructuring advanced: domestic debt restructuring completed in 2023; standstill on external commercial and bilateral debt announced in late December 2022; formal request for debt treatment under G20 Common Framework in early 2023.
  - Agreement-in-principle (AIP) with official creditor committee (OCC) in January; MoU codifying AIP aiming to be signed in coming weeks; engagement with external commercial creditors ongoing with good prospects for comparable terms.
  - Public debt management strengthening: upgrading securities operation infrastructure and strengthening monitoring of contingent liabilities from SOEs; authorities requested Fund TA to develop an effective SOE oversight strategy.
- Restructuring targets:
  - Authorities aim to achieve debt sustainability and a moderate risk of debt distress under LIC-DSF by bringing PV of total debt-to-GDP and external debt service-to-revenue ratios down to 55 and 18 percent, respectively, by 2028.
  - DSA scenario accounts for completed domestic debt restructuring and agreement between Ghana and its OCC and does not model any relief on external commercial debt.

### Macroeconomic assumptions and risks
- DSA baseline anchored on Fund-supported program trajectory aiming to restore macro stability and debt sustainability through:
  - Implementing a realistic and feasible fiscal adjustment program.
  - Appropriately tightening monetary policy and enhancing exchange rate flexibility.
  - Implementing growth-enhancing structural reforms.
- Recent macro performance and outlook:
  - Real GDP growth: 5.1 percent in 2021; 3.8 percent in 2022; estimated 2.9 percent in 2023.
  - Headline inflation: reached 54 percent in December 2022; declined to 23.2 percent at end-2023.
  - Gross international reserves: fell by about $6.5 billion in 2022 to US$1.4 billion at end-2022; recovered to US$3.7 billion at end-2023 (1.7 months of imports), about two thirds due to BoG’s gold buying programs.
- Program baseline projections:
  - Non-extractive growth projected to strengthen to 5.0 percent by 2029 onwards.
  - Growth in extractive activities expected to stabilize around 5.0 percent on average within five years.
  - Overall real GDP growth expected to pick up to 3.1 percent in 2024 and recover gradually to reach 5 percent in 2029.
  - Inflation projected to gradually fall to the central bank’s target of 8 percent by end-2025.
  - Current account deficit projected to stabilize at around 2-2.5 percent of GDP over the medium term.
  - Official reserves projected to rise to 3 months of prospective imports (US$7.7 billion) by 2026.
- Structural reforms under PC-PEG expected to support sustained 5-percent growth by improving business environment (including reducing minimum capital requirements for FDI and reforming the Public Private Partnership Act), export competitiveness, entrepreneurship, public sector management, digital transition, and climate adaptation.

*International Monetary Fund — Ghana: Debt Sustainability Analysis content unit*

### 14.      Compared to the first review, changes to macroeconomic assumptions are small. Real GDP

### 1ghaea2024002-print-pdf - 14.      Compared to the first review, changes to macroeconomic assumptions are small. Real GDP

### Macroeconomic assumptions and projections
- Real GDP growth
  - 2022: First Review 3.1; Current 3.8
  - 2023: First Review 2.3; Current 2.9
  - 2024: First Review 2.8; Current 3.1
  - 2025: First Review 4.4; Current 4.4
  - 2026: First Review 4.9; Current 4.9
  - 2027: First Review 5.0; Current 5.0
  - 2028: First Review 5.0; Current 5.0
  - 2029-44: First Review 5.0; Current 5.0
- Inflation (GDP deflator)
  - 2022: First Review 28.2; Current 28.2
  - 2023: First Review 36.3; Current 33.1
  - 2024: First Review 20.2; Current 17.5
  - 2025: First Review 10.9; Current 11.1
  - 2026: First Review 7.5; Current 7.9
  - 2027: First Review 7.5; Current 7.9
  - 2028: First Review 7.5; Current 7.6
  - 2029-44: First Review 7.7; Current 7.8
- Nominal GDP (in Billion of USD)
  - 2022: First Review 72.2; Current 74.0
  - 2023: First Review 76.3; Current 76.4
  - 2024: First Review 75.2; Current 75.3
  - 2025: First Review 76.0; Current 75.8
  - 2026: First Review 81.1; Current 81.1
  - 2027: First Review 86.5; Current 86.8
  - 2028: First Review 92.2; Current 92.8
  - 2029-44: First Review 163.7; Current 172.3
- External sector
  - Exports, Goods & Services
    - 2022: First Review 7.7; Current 7.0
    - 2023: First Review -4.6; Current -4.8
    - 2024: First Review 5.5; Current 3.6
    - 2025: First Review 4.9; Current 6.8
    - 2026: First Review 5.3; Current 4.1
    - 2027: First Review 3.8; Current 5.9
    - 2028: First Review 4.3; Current 4.3
    - 2029-44: First Review 4.5; Current 4.3
  - Imports, Goods & Services
    - 2022: First Review 4.5; Current 4.5
    - 2023: First Review -3.8; Current -1.0
    - 2024: First Review 4.1; Current 2.1
    - 2025: First Review 5.3; Current 4.5
    - 2026: First Review 5.0; Current 4.3
    - 2027: First Review 4.3; Current 4.8
    - 2028: First Review 4.2; Current 4.4
    - 2029-44: First Review 4.8; Current 4.4
  - Non-interest Current Account Balance (percent of GDP)
    - 2022: First Review -0.2; Current 0.1
    - 2023: First Review -0.7; Current 1.0
    - 2024: First Review -0.6; Current 0.4
    - 2025: First Review -0.3; Current -0.1
    - 2026: First Review 0.0; Current -0.1
    - 2027: First Review 0.1; Current 0.1
    - 2028: First Review 0.0; Current 0.1
    - 2029-44: First Review 0.2; Current 0.0

### Fiscal outlook, adjustment, and program assumptions
- Baseline fiscal adjustment and anchors
  - The central government’s primary balance (commitment basis) is the key fiscal anchor.
  - Projected improvement of the primary balance by 5.9 percent of GDP between 2022 and 2026.
  - Target: primary balance surplus of 1.5 percent of GDP in 2025, to be maintained at least until 2028.
  - Authorities’ revenue-to-GDP objective: raise government revenue-to-GDP ratio to over 18 percent by end of the program (from 15.8 percent in 2022).
- Recent and near-term fiscal outcomes
  - 2023 primary balance achieved: -0.3 percent of GDP (some 4 percentage points adjustment compared to 2022).
  - 2024 expected primary balance (commitment basis) to improve by 0.8 percentage points to a surplus of 0.5 percent of GDP.
  - 2024 Budget measures aim to permanently improve the non-oil revenue-to-GDP ratio by 0.9 percent of GDP (streamlining large VAT exemptions, strengthening excise taxes, reforms to reinforce tax compliance and revenue administration).
- Revenue, expenditure, and primary balance (Text Table values, percent of GDP)
  - Revenue and Grants (including Cocobod’s net income for debt service)
    - 2022: First Review 15.8; Current 15.7
    - 2023: First Review 15.8; Current 16.0
    - 2024: First Review 16.9; Current 17.1
    - 2025: First Review 17.7; Current 17.8
    - 2026: First Review 18.5; Current 18.3
    - 2027: First Review 18.3; Current 18.1
    - 2028: First Review 18.2; Current 18.2
    - 2029-44: First Review 18.0; Current 18.0
  - Primary Expenditure (cash basis)
    - 2022: First Review 20.7; Current 18.9
    - 2023: First Review 16.2; Current 15.9
    - 2024: First Review 15.1; Current 17.8
    - 2025: First Review 14.8; Current 16.8
    - 2026: First Review 15.8; Current 17.4
    - 2027: First Review 15.7; Current 17.2
    - 2028: First Review 15.7; Current 17.2
    - 2029-44: First Review 17.0; Current 17.0
  - Primary Deficit (cash basis) 1/2/
    - 2022: First Review 0.9; Current 3.2
    - 2023: First Review 0.4; Current -0.2
    - 2024: First Review 0.3; Current 0.6
    - 2025: First Review -0.8; Current -0.9
    - 2026: First Review -0.9; Current -0.9
    - 2027: First Review -0.7; Current -0.9
    - 2028: First Review -0.8; Current -0.9
    - 2029-44: First Review -1.0; Current -1.0
  - Memorandum: Primary Deficit (commitment basis) 4/
    - 2022: First Review 3.7; Current 4.3
    - 2023: First Review 0.5; Current 0.3
    - 2024: First Review -0.7; Current -0.5
    - 2025: First Review -1.8; Current -1.5
    - 2026: First Review -1.8; Current -1.5
    - 2027: First Review -1.6; Current -1.5
    - 2028: First Review -1.7; Current -1.5
    - 2029-44: First Review -1.0; Current -1.0

### Debt restructuring, financing, and reserve assumptions
- Domestic debt restructuring (Box 1 highlights)
  - All domestic debt except for T-bills included in restructuring perimeter.
  - Restructuring generated about US$ 8 billion of debt service savings over 2023-26.
  - Present value of overall public debt to GDP lowered by 9 percentage points in 2028.
  - Participation and terms examples:
    - Holders other than individuals and pension funds: approximately 90 percent participation; new bullet bonds maturing 2027-38 with coupons up to 10 percent (part coupons capitalized in 2023 and 2024).
    - Individuals: 62 percent participation; under-60 offered amortized bonds maturing 2027-28 with 10 percent cash coupon; over-60 offered similar instruments with 15 percent cash coupon.
    - Pension funds: 95 percent participation; exchanged at 115 percent exchange ratio into 2027 and 2028 bonds plus additional strip coupons of 10 percent.
    - Government USD bonds: 92 percent participation; new bullet bonds maturing 2027 and 2028 with 2.75 and 3.25 percent coupons.
    - Cocobills: 97 percent participation; exchanged into Cocobod-issued bullet bonds maturing 2024-2028 with 13 percent coupon.
    - Non-marketable BoG holdings: exchanged into 2038 bond at 50 percent exchange ratio. The USD 1 billion SDR-related loan was not treated.
- External financing assumptions and ceilings
  - Baseline assumes government will not regain external market access until 2027.
  - New external borrowing under program restricted to a PV of US$ 229.3 and US$ 50 million in 2024 and 2025, respectively.
  - 2024 borrowing limit revised up to account for authorities’ request for a security-related loan of around US$ 172 million.
  - Disbursement assumptions 2023-26 (selected):
    - World Bank total disbursements about US$ 2.9 billion (about US$ 1.15 billion for budget support loans; US$ 358 million for other projects contributing to program financing; US$ 1.4 billion for project support).
    - AfDB disbursements assumed US$ 343 million (US$ 240 million project loans and grants over 2023-26; US$ 104 million for budget support over 2023-24).
    - IMF disbursements assumed US$ 3 billion in 2023-26.
    - Other bilateral development partners expected to contribute US$ 872 million from 2024-26, limited by pre-COD disbursement limits.
  - After completed domestic debt restructuring, residual financing gap assumed filled through accumulation of further external arrears (simulated issuance of stylized “arrears bonds” at 5 percent interest rate and 10-year maturity).
  - Domestic financing assumptions:
    - 2024 domestic financing needs assumed to be met through issuance of T-bills (T-bill market functional with strong non-bank demand).
    - Starting 2025, baseline assumes resumption of medium and long-term domestic debt issuance.
    - About 67 percent of 2024 gross financing needs met by domestic issuances, with similar ratios through the program.
- Treatment of bilateral external debt
  - Bilateral external debt treated as agreed with the OCC under the G20 Common Framework.
  - Agreed debt treatment: full debt service relief over the program period from all bilateral claims committed and disbursed before December 2022; rescheduled debt service capitalized and accruing additional interest until repayment in years 16 and 17 after original due date.
  - Disbursements of pre-CoD projects after December 2022 will not be restructured; authorities and OCC creditors committed to limit such disbursements (including commercial) to US$ 250 per year in 2024 and 2025.

### Projections realism and risks
- Historical projection bias
  - Staff projections have tended to overestimate fiscal adjustment and underestimate overall and external debt growth.
  - Compared to the five-year projection in the 2019 DSA, total public debt exceeded estimates by 30.6 percentage points of GDP between 2019 and 2023.
  - External debt exceeded 2019-DSA 5-year projections by 14.7 percentage points of GDP.
- Feasibility of fiscal adjustment
  - Baseline’s projected primary balance adjustment of 5.9 percent of GDP over three years deemed feasible.
  - Target under the program: primary balance surplus of 1.5 percent of GDP by 2025 on a commitment basis and maintained over the medium term.
  - Consolidation falls within the top quartile for peers’ consolidation distribution but below the top of that distribution.
- Downside risks (significant)
  - Risks contingent on program implementation, execution of external debt restructuring, and adequate financing from development partners.
  - Potential shocks and sources of deterioration:
    - Delays in implementing needed adjustment and reforms.
    - Delays in obtaining external debt relief.
    - Weak interagency coordination.
    - Lower agricultural and commodity production.
    - Deterioration in global conditions.
    - Domestic debt restructuring risks to domestic financial sector stability.
    - Continued exchange rate uncertainty, large domestic financing needs, and still high inflation despite monetary tightening.
    - Policy slippages and reversals, potentially exacerbated by the upcoming 2024 elections.
    - Need for higher support to Cocobod and larger-than-expected financial sector support due to the domestic debt exchange program.
  - Mitigating factor: strong political support for the program.
- Other projections/assumptions
  - Average real interest rate on domestic debt (selected years, percent)
    - 2022: First Review -11.6; Current -11.6
    - 2023: First Review -24.1; Current -22.3
    - 2024: First Review -8.9; Current -11.1
    - 2025: First Review 0.5; Current -0.2
    - 2026: First Review 3.1; Current 2.4
    - 2027: First Review 2.3; Current 1.9
    - 2028: First Review 2.9; Current 2.9
    - 2029-44: First Review 4.5; Current 4.5
  - Average real interest rate on external debt (percent)
    - 2022: First Review -2.5; Current -2.5
    - 2023: First Review 1.4; Current -3.1
    - 2024: First Review 2.4; Current 2.2
    - 2025: First Review 2.4; Current 2.4
    - 2026: First Review 2.7; Current 2.1
    - 2027: First Review 2.7; Current 2.2
    - 2028: First Review 2.7; Current 2.2
    - 2029-44: First Review 3.5; Current 3.4

_Source: IMF staff calculations based on the authorities' reported data._

### 24.      Ghana’s debt carrying capacity is assessed as “medium”, unchanged from the last DSA.

### 24.      Ghana’s debt carrying capacity is assessed as “medium”, unchanged from the last DSA.

### Debt carrying capacity assessment
- Composite Indicator (CI) score: 2.722.
- CI cut-off values: weak = 2.69; strong = 3.05.
- Interpretation: CI score of 2.722 remains between the cut-off values for weak and strong debt-carrying capacity, suggesting a medium debt carrying capacity.
- CI composition: the weighted average of the 10-year average of the World Bank’s Country Policy and Institutional Assessment (CPIA) score and macro-economic variables from the October 2023 WEO vintage.

### Stress tests and key shock channels
- Most relevant variables for debt dynamics: primary balance, real GDP growth, exports, contingent liabilities.
- Standard shock scenarios:
  - GDP growth, primary balance, exports, and FDI: calibrated at 1 standard deviation in 2025 from their respective historical averages.
  - Exchange rate: one-time 30 percent depreciation in 2025.
  - Combined shock: all the above at half magnitude.
- Tailored stress tests:
  - Commodity prices: simulate a one standard deviation drop in both fuel and non-fuel commodity export prices. (Commodities represent over 80 percent of exports.)
  - Market financing shock: simulate a 400bps increase in the cost of borrowing for 3 years, a shortening of average maturities on external debt by 2 years and a 15 percent exchange rate depreciation.
  - Contingent liabilities stock: contingent liability stress test suggests a one-off increase in the public debt to GDP ratio, with the shock components set at their default values.
- Contingent liability shock components:
  - (i) minimum starting value of 5 percent of GDP; and
  - (ii) tailored component: financial market contingent liabilities (5 percent of GDP), PPPs (2.4 percent of GDP), other SOEs debt not captured by debt coverage (2 percent of GDP).

### F. External DSA Assessment — breaches and shock impacts
- Under the baseline, three external debt burden indicators breach their thresholds; one breaches over the full horizon and by large margins.
- Specific indicator outcomes:
  - Debt service-to-revenue ratio: continues to exceed its threshold of 18 percent throughout the entire forecast horizon.
  - PV of PPG external debt-to-GDP: remains above its 40 percent threshold under the baseline until 2027.
  - Debt service-to-exports ratio: breaches its threshold in 2032-34 and then in 2040-43.
  - PV of external debt-to-exports ratio: does not breach its 180 percent threshold under the baseline; only reaches it under an exports shock scenario.
- Most extreme shocks by indicator:
  - One-off 30-percent nominal depreciation of the cedi: most extreme for PV of PPG external debt-to-GDP and the debt service-to-revenue ratio.
  - Exports shock: highest impact on the debt service-to-exports indicator.

### G. Public DSA Assessment — baseline and risks
- Under the baseline:
  - PV of total PPG debt-to-GDP breaches its 55 percent benchmark until 2034, despite completion of the domestic debt restructuring.
- Most severe shock impacts:
  - Primary balance shock: most severe impact on the PV of debt-to-GDP ratio and the debt service-to-revenue ratio.
  - Commodity price shock: impacts the PV of debt-to-revenue ratio most strongly.
- Market financing risks:
  - Assessed as “high” with loss of market access, signaling further liquidity pressures amid worsening market sentiment.
  - Both market financing risk indicators breach their respective thresholds.
  - Gross financing needs (GFN): just above 14 percent of GDP in 2023 and 2024; expected to decline gradually towards 12 percent of GDP in 2032.
  - Eurobond spreads: surged since mid-2021 to surpass 3400 bps at early 2023, well above the 570-bps benchmark.
  - Current spreads: above 2000; market access remains closed.

### Sustainability assessment and policy implications
- Assessment: Ghana’s external and overall public debt are assessed to be in distress and debt to be unsustainable.
- Key contextual facts and recent actions:
  - Loss of international market access in 2021 amid deterioration in market sentiment and surge in spreads.
  - Sovereign bond spread: accelerated from 660 bps in mid-2021 to exceed 3400 bps at early 2023; remaining close to 3000 today.
  - Authorities requested IMF financial support in July 2022.
  - Authorities hired financial and legal advisors; in December 2022 launched a debt restructuring covering domestic debt as well as external commercial and official bilateral debt and announced a standstill on external debt service to all but multilateral creditors.
  - Domestic debt restructuring completed in September 2023.
  - On the external front, authorities reached agreement with the OCC on the terms of a debt treatment under the G20’s Common Framework.
- Remaining needs: large financing gaps will remain and would need to be filled through a debt restructuring operation with commercial creditors in line with the DSA and IMF program parameters.
- Conditions to restore sustainability:
  - Finalizing the public debt restructuring and successfully implementing the reform agenda under the IMF-supported program are necessary to restore debt sustainability.
  - Baseline assumes strong program ownership and full commitment to implement the Fund-supported program to restore debt sustainability and bring the debt risk rating to “moderate” in the medium term.
  - Specific medium-term targets included in the baseline:
    - Reduce the PV of total debt-to-GDP to 55 percent by 2028.
    - Reduce external debt service-to-revenue ratio to 18 percent by 2028.
  - Required measures:
    - Revenue-based fiscal consolidation.
    - Higher spending efficiency and stronger social safety nets.
    - Structural reforms to support greater exchange rate flexibility, a more diversified economy and stronger growth.

*Source: 1ghaea2024002-print-pdf - Ghana: Debt carrying capacity assessment and DSA excerpts.*

### 31.      Enhancing debt data and transparency are essential to better identify PPG debt and

### 31.      Enhancing debt data and transparency are essential to better identify PPG debt and

### Debt data, transparency, and SOEs
- Enhancing debt data and transparency are essential to better identify PPG debt and contingent liabilities and allow for a more accurate assessment of debt vulnerabilities.
- Materialization of contingent liabilities, off-budget operations, and domestic arrears have been drivers of debt accumulation in the past.
- Rapid cedi depreciation has been a factor, underlining the need to restore macroeconomic stability.
- SOEs represent a potential source of government obligations, either in the form of undisclosed debt or contingent liabilities.
- A more comprehensive coverage of SOEs debt and guarantees—particularly those that engage in quasi-fiscal activities—should allow for a more accurate assessment of fiscal risks and enhance debt coverage.
- As part of its Sustainable Development Finance Policy (SDFP), the World Bank supported the publication of the 2020 State Ownership Report in 2022, to provide a better picture on large SOEs’ financial liabilities.

### Stress-test assumptions and realism tools
- Interest rate on additional borrowing resulting from the stress test is estimated at 9 percent (higher than the default rate of 4.9 percent) to reflect deterioration in Ghana’s creditworthiness and loss of market access.
- The most extreme stress test is defined as the test that yields the highest ratio in or before 2034; one-off breaches may be presented if applicable.
- Commodity price shock magnitudes are based on the commodity prices outlook prepared by the IMF research department.
- The public DSA allows for domestic financing to cover additional financing needs generated by stress tests in the public DSA; default terms of marginal debt are based on baseline 10-year projections.
- Realism tools present projected contributions to real GDP growth from public and private investment and possible growth paths under different fiscal multipliers (multipliers shown include 0.2, 0.4, 0.6, 0.8).

### Market-financing risk indicators
- Both the baseline and market financing shock scenarios display very similar paths for PV of debt-to-exports, debt service-to-exports and debt service-to-revenue ratios due to the low level of new envisaged commercial borrowing in the 3 years from the second year of the projection (2024-26).
- Breach of benchmark: Yes.
- EMBI: 570.
- GFN Benchmarks: 14.
- Maximum gross financing needs (GFN) over 3-year baseline projection horizon is highlighted as a risk metric.

### Key projections and vulnerability indicators (selected exact figures from DSAs)
- Table 1 — External Debt Sustainability Framework (Baseline Scenario)
  - External debt (nominal): 50.0 (2023), 54.3 (2024), 54.8 (2025), 52.6 (2026), 51.1 (2027), 49.6 (2028), 47.3 (2029), 41.1 (2034), 34.1 (2044), 43.8 (Average), 47.7 (Projections)
  - of which: public and publicly guaranteed (PPG): 44.3 (2023), 48.3 (2024), 48.5 (2025), 46.4 (2026), 45.1 (2027), 43.7 (2028), 41.5 (2029), 35.8 (2034), 29.6 (2044), 39.3 (Average), 41.9 (Projections)
  - PV of PPG external debt-to-GDP ratio: 39.5 (2023), 42.3 (2024), 43.9 (2025), 41.8 (2026), 40.5 (2027), 39.3 (2028), 37.3 (2029), 32.8 (2034), 27.5 (2044)
  - PV of PPG external debt-to-exports ratio: 124.1 (2023), 126.3 (2024), 123.6 (2025), 120.9 (2026), 118.6 (2027), 117.8 (2028), 114.5 (2029), 114.2 (2034), 120.6 (2044)
  - PPG debt service-to-exports ratio: 1.7 (2023), 9.8 (2024), 14.7 (2025), 12.7 (2026), 14.5 (2027), 13.0 (2028), 13.0 (2029), 16.2 (2034), 14.1 (2044)
  - PPG debt service-to-revenue ratio: 3.4 (2023), 19.5 (2024), 29.8 (2025), 24.3 (2026), 27.7 (2027), 24.2 (2028), 23.7 (2029), 26.1 (2034), 18.0 (2044)
  - Gross external financing need (Million of U.S. dollars): 919.3 (2023), 2344.3 (2024), 3352.3 (2025), 2777.9 (2026), 3366.3 (2027), 3001.6 (2028), 3162.1 (2029), 7967.3 (2034), 5321.5 (2044)
  - Real GDP growth (in percent): 2.9 (2023), 3.1 (2024), 4.4 (2025), 4.9 (2026), 5.0 (2027), 5.0 (2028), 5.0 (2029), 5.0 (2034), 5.0 (2044), 4.2 (Average), 4.8 (Projections)
  - Effective interest rate (percent): 0.9 (2023), 4.1 (2024), 3.9 (2025), 4.1 (2026), 4.2 (2027), 4.3 (2028), 4.4 (2029), 5.2 (2034), 5.3 (2044), 5.4 (Average), 4.5 (Projections)
  - Government revenues (excluding grants, in percent of GDP): 15.8 (2023), 16.9 (2024), 17.5 (2025), 18.1 (2026), 17.9 (2027), 17.9 (2028), 17.8 (2029), 17.8 (2034), 17.8 (2044), 14.0 (Average), 17.8 (Projections)
  - Aid flows (in Million of US dollars): 219.7 (2023), 994.3 (2024), 951.2 (2025), 887.1 (2026), 858.3 (2027), 898.2 (2028), 940.8 (2029), 755.9 (2034), 1034.0 (2044)
  - Nominal GDP (Million of US dollars): 76,402 (2023), 75,307 (2024), 75,761 (2025), 81,054 (2026), 86,817 (2027), 92,778 (2028), 99,054 (2029), 139,170 (2034), 267,463 (2044)

- Table 2 — Public Sector Debt Sustainability Framework (Baseline Scenario)
  - Public sector debt: 82.9 (2023), 82.5 (2024), 79.5 (2025), 76.1 (2026), 72.5 (2027), 69.3 (2028), 66.9 (2029), 57.5 (2034), 45.3 (2044), 67.8 (Average), 68.3 (Projections)
  - of which: external debt: 44.3 (2023), 48.3 (2024), 48.5 (2025), 46.4 (2026), 45.1 (2027), 43.7 (2028), 41.5 (2029), 35.8 (2034), 29.6 (2044), 39.3 (Average), 41.9 (Projections)
  - Change in public sector debt: -9.8 (2023), -0.4 (2024), -3.0 (2025), -3.4 (2026), -3.6 (2027), -3.2 (2028), -2.4 (2029), -1.6 (2034), -0.7 (2044)
  - Identified debt-creating flows: -11.1 (2023), -4.0 (2024), -3.0 (2025), -3.0 (2026), -3.0 (2027), -2.7 (2028), -2.6 (2029), -1.8 (2034), -1.4 (2044)
  - Primary deficit: -0.2 (2023), 0.6 (2024), -0.9 (2025), -0.9 (2026), -0.9 (2027), -0.9 (2028), -1.2 (2029), -1.0 (2034), -1.0 (2044)
  - Revenue and grants: 16.1 (2023), 17.2 (2024), 17.8 (2025), 18.3 (2026), 18.1 (2027), 18.2 (2028), 18.0 (2029), 18.0 (2034), 18.0 (2044)
  - PV of public debt-to-GDP ratio: 81.2 (2023), 79.7 (2024), 76.2 (2025), 72.7 (2026), 69.1 (2027), 66.0 (2028), 63.8 (2029), 55.5 (2034), 44.3 (2044)
  - Debt service-to-revenue and grants ratio: 65.0 (2023), 72.8 (2024), 91.6 (2025), 82.6 (2026), 84.0 (2027), 81.3 (2028), 71.3 (2029), 71.3 (2034), 52.8 (2044)
  - Gross financing need: 10.2 (2023), 13.8 (2024), 14.6 (2025), 13.3 (2026), 13.5 (2027), 13.0 (2028), 11.6 (2029), 11.9 (2034), 8.5 (2044)

### Drivers of past debt dynamics and unexpected changes
- Figures show drivers including price and exchange rate movements, real GDP growth, nominal interest rates, current account and FDI, and residual/other debt-creating flows.
- Unexpected changes in debt are presented as the difference between anticipated and actual contributions on debt ratios.
- Distribution across LICs indicates interquartile ranges and median changes in PPG debt for comparative perspective.

### Sensitivity and tailored tests
- Sensitivity analysis and bound tests cover scenarios including real GDP growth shocks, primary balance shocks, export shocks, depreciation, and combinations.
- Tailored tests include combined contingent liabilities, commodity price shocks, and market financing shocks.
- Thresholds and breach indicators are reported across the projection horizon 2024–34.

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

### 2. Primary balance1015141615151616182021

### 1ghaea2024002-print-pdf - 2. Primary balance1015141615151616182021

### Recent economic developments and outlook
- Real GDP growth in 2023 was "well above the rate envisaged during the first review", driven by services and agriculture.
- Economic growth in 2024 is projected to further improve and gradually accelerate towards its medium-term potential of around 5 percent.
- Inflation path:
  - 23 percent at end-May (2024).
  - Expected to decline to an annual rate of 15 percent by end-December 2024.
  - Expected to fall within the Bank of Ghana’s (BoG) medium-term target of 8±2 percent by end-2025, contingent on sustaining stringent fiscal and monetary policies.
- External sector: improved in 2023, driven by higher remittances and lower primary income outflows partly linked to lower payments to independent power producers (IPPs).
- Reserve objective: authorities plan to progressively rebuild reserves to at least 3 months of imports cover by the end of the program.
- Date of statement: June 28, 2024.

### Fiscal policy and debt management
- Authorities emphasize "bold and enduring fiscal consolidation plans to restore fiscal sustainability" and judge consolidation to be "broadly on track".
- Revenue measures:
  - Frontloaded the revenue package in the Medium-Term Revenue Strategy (MTRS) in the 2024 Budget to increase non-oil revenue.
  - Preparing a new Extractive Industry Fiscal Regime bill with IMF technical assistance; expected submission to Parliament by end-December 2024.
- Expenditure and social spending:
  - Prioritizing and streamlining expenditure while improving spending efficiency, including in social programs.
  - Increased allocations for highly targeted social intervention programs in the 2024 Budget.
  - Committed to meeting the program’s indicative floor for social spending at every review.
  - Committed to continue implementing the automatic indexation framework to preserve the real value of social benefits.
- Debt and cash management:
  - Continue strengthening debt and cash management frameworks to restore medium-term debt sustainability.
  - Prioritize concessional financing for projects; maintain hard limits on newly contracted non-concessional external debt.
  - Prioritize IPP arrears payments and align quarterly allotments of spending commitment with the 3-month cash forecasts.
  - Developing a medium-term debt management strategy after completing the comprehensive external debt restructuring program.
  - Agreement with OCC on a MoU: June 11, 2024 (formalizing the Agreement-in-Principle under the G20 Common Framework reached in January 2024).
  - Agreement-in-Principle with representatives of private Eurobond holders: June 20, 2024; OCC conducting an assessment on comparability of treatment.

### Monetary, financial sector, and exchange rate policies
- Monetary policy:
  - BoG will keep an appropriately tight monetary policy stance to anchor inflation expectations and foster orderly disinflation toward 8±2 percent.
  - BoG reaffirms commitment to avoid monetary financing of the budget.
  - Authorities to accelerate amendment of the BoG Act 2002 (Act 612) and ensure progressive recapitalization of the BoG while adhering to fiscal commitments and debt targets under the program.
  - Commitment to implement outstanding recommendations from the 2023 safeguard assessments.
- Exchange rate and FX policy:
  - Promoting greater exchange rate flexibility to facilitate reserve accumulation and build resilience.
  - Committed to eliminating multiple currency practices and limiting FX intervention to address only extreme temporary market volatility.
- Financial sector stability:
  - Maintain vigilance and take remedial actions following domestic debt restructuring.
  - Ensure expeditious completion of banks’ recapitalization and strengthen risk-based supervision of banks with capital shortfalls.
  - Operationalize the Ghana Financial Sector Fund; prioritize solvency support to state-owned banks while strengthening governance, business model rationalization, and risk management.
  - Commit to improving the AML/CFT framework, including strengthening transparency of beneficial ownership and implementing Customer Due Diligence requirements to meet FATF international standards.

### Structural reforms and climate resilience
- Structural reforms:
  - Speed up implementation of the growth strategy in the PC-PEG and the Medium-Term National Development Policy Framework, 2022-25.
  - Strengthen anti-corruption framework; a new Conduct of Public Officer Act submitted for Cabinet approval to strengthen the asset declaration system.
  - Requested IMF TA support for a Governance and Corruption Diagnostic Assessment and committed to publish the report when finalized.
  - Prioritize investment in broader financial inclusion to support higher productivity growth.
- Climate resilience:
  - Fast-tracking implementation of Ghana’s National Adaptation Plan (NAP) framework to integrate adaptation into economic, environmental, and social decision making.
  - NAP process identified adaptation priorities for agriculture, forestry, water, energy, health, and gender.

### Debt sensitivity analysis (table note)
- The source includes "Table 4. Ghana: Sensitivity Analysis for Key Indicators of Public Debt, 2024–34 (In Percent)" with projections and scenarios (Baseline; A. Alternative Scenarios; B. Bound Tests; C. Tailored Tests) and various indicators such as PV of debt-to-GDP ratio, PV of debt-to-exports ratio, PV of Debt-to-Revenue Ratio, Debt service-to-exports ratio, Debt service-to-revenue ratio, and Projections 1/.
- Table sources: "Country authorities; and staff estimates and projections."
- Notes referenced in the table:
  - 1/ A bold value indicates a breach of the benchmark.
  - 2/ Variables include real GDP growth, GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows.
  - 3/ Includes official and private transfers and FDI.

### Conclusion and request
- Authorities reaffirm dedication to steadfast implementation of sound macroeconomic policies to promote long-lasting macroeconomic stability, medium-term fiscal and debt sustainability, and sustainable, inclusive, and green growth.
- Authorities request the support of Executive Directors for completion of the second review under the ECF arrangement and related requests to embolden implementation of their stabilization and reform agenda.

*Statement by Mr. Bijani, Executive Director for Ghana; Mr. Akosah, Advisor to the Executive Director; June 28, 2024. Sources: Country authorities; and staff estimates and projections.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2024/english/1ghaea2024002-print-pdf.pdf_