IMF Executive Board Completes the Second Review under the Extended Credit Facility Arrangement with Ghana
IMF News, June 28, 2024
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- Published: June 28, 2024
Key decisions and disbursement
- Executive Board completed the second review of Ghana’s 36-month Extended Credit Facility (ECF) Arrangement (approved May 2023).
- Immediate disbursement: SDR 269.1 million (about US$360 million).
- Total disbursements under the arrangement to date: about US$1.6 billion.
- Full program size: US$3 billion.
Program performance and reform progress
- Overall assessment:
- Ghana’s performance under the IMF-supported program has been generally strong.
- All quantitative performance criteria for the second review and almost all indicative targets were met.
- Key structural reform milestones have advanced, with some delays.
- Outcomes to date:
- Growth has proven more resilient than initially expected.
- Inflation has declined rapidly from its 2022 highs.
- Fiscal and external positions have improved significantly.
- Debt restructuring:
- Agreement reached with Ghana’s Official Creditor Committee (OCC) on a Memorandum of Understanding (MoU) formalizing the January 2024 agreement in principle (agreement reached on June 11, 2024).
- Agreement in principle reached with representatives of Eurobond holders on a restructuring consistent with program parameters, subject to confirmation on comparability of treatment by the OCC.
Fiscal policy stance and commitments
- Recent fiscal performance:
- Ghana’s primary fiscal balance improved by over 4 percent of GDP in the prior year.
- Authorities’ commitments:
- Achieve primary fiscal surpluses of ½ percent of GDP in 2024 and 1½ percent of GDP in 2025.
- Continue revenue mobilization reforms and streamline non-priority expenditures.
- Expand social protection programs to mitigate fiscal adjustment impacts on the most vulnerable.
- Strengthen tax administration, expenditure controls and management of arrears, fiscal rules and institutions, and SOEs management (including energy and cocoa sectors).
- Bank recapitalization:
- Ministry of Finance has started recapitalizing state-owned banks consistent with available resources.
- BoG ensured implementation of banks’ recapitalization plans.
Monetary and financial sector policies
- Bank of Ghana (BoG) actions:
- Maintained a prudent monetary policy stance to sustain rapid reduction in inflation.
- Taken steps to rebuild international reserves.
- Strengthened measures to preserve financial sector stability.
- Ongoing priorities:
- Maintain an appropriately tight monetary stance.
- Enhance exchange rate flexibility.
- Timely implementation of IMF advice on safeguards.
- Sustain efforts on banks’ recapitalization and cost-effective resolution of legacy issues to ringfence financial sector stability.
Structural reform agenda
- Focus areas:
- Ambitious structural reforms to foster private sector investment, enhance governance and transparency.
- Recalibrate policy interventions underpinning Ghana’s National Development Policy Framework to reflect post-COVID-19 shocks.
- Expected impact:
- Reforms are key to boosting potential growth, sustainable job creation, and poverty reduction.
Risks and near-term priorities
- Main risks:
- Downside risks to the medium-term outlook, including those related to the upcoming general elections (December 2024).
- Near-term priorities:
- Perseverance in macroeconomic policy adjustment and reforms to fully restore macroeconomic stability and debt sustainability.
- Finalize comprehensive debt restructuring and ensure comparability of treatment across creditors.
- Resolve fiscal slippages risks by keeping domestic revenue mobilization on track and tightening expenditure commitment controls.
- Bolster targeted social protection to cushion vulnerable populations.
Selected economic and financial indicators (2022–29) — selected lines from published table
- GDP at constant prices (annual percent change): 2022: 3.8; 2023 Prel.: 2.9; 2024 Proj.: 3.1; 2025 Proj.: 4.4; 2026 Proj.: 4.9; 2027 Proj.: 5.0.
- Consumer price index (end of period): 2022: 54.1; 2023: 23.2; 2024: 15.0; 2025: 8.0.
- Consumer price index (annual average): 2022: 31.9; 2023: 39.2; 2024: 19.5; 2025: 11.5.
- Central government revenue (percent of GDP): 2022: 15.7; 2023: 16.0; 2024: 16.9; 2025: 17.4; 2026: 18.0.
- Central government expenditure (commitment basis, percent of GDP): 2022: 27.5; 2023: 19.6; 2024: 21.6; 2025: 21.1; 2026: 20.8.
- Overall balance (commitment basis, percent of GDP): 2022: -11.8; 2023: -3.6; 2024: -4.7; 2025: -3.7; 2026: -3.1; 2027: -2.8.
- Primary balance (commitment basis, percent of GDP): 2022: -4.3; 2023: -0.3; 2024: 0.5; 2025: 1.5; 2026: 1.3.
- Non-oil primary balance (commitment basis, percent of GDP): 2022: -6.3; 2023: -1.8; 2024: -1.0; 2025: 0.1; 2026: 0.2; 2027: 0.3; 2028: -0.1.
- Public debt (gross, percent of GDP): 2022: 92.7; 2023: 82.9; 2024: 82.5; 2025: 79.5; 2026: 76.1; 2027: 72.5; 2028: 69.3; 2029: 66.9.
- External debt (percent of GDP): 2022: 43.0; 2023: 44.3; 2024: 48.3; 2025: 48.5; 2026: 46.4; 2027: 45.1; 2028: 43.7; 2029: 41.5.
- Credit to the private sector (commercial banks, percent change): 2022: 31.8; 2023: 10.7; 2024: 22.0; 2025: 13.0; 2026: 14.9.
- Policy rate (percent, end of period): 2022: 27.0; 2023: 30.0.
- Current account balance (percent of GDP): 2022: -2.3; 2023: -1.4; 2024: -2.5; 2025: -2.0; 2026: -2.2; 2027: -2.1.
- BOP financing gap (US$ million): 2022: 3,364; 2023: 3,098; 2024: 3,647; 2025: 1,769; 2026: 1,565; 2027: 1,116; 2028: 318.
- Financing pledges/assistance (US$ million, selected): IMF: 600; 1,320; 720; 360; 0. World Bank: 27; 679; 428; 374. AfDB: 60; 44.
- Arrears (US$ million): arrears to commercial external creditors: 1,841; arrears to official bilateral creditors: 836.
- Exceptional financing to cover residual financing gap (US$ million): 1,055; 2,499; 1,035.
- Gross international reserves (program, US$ million): 1,454; 3,661; 5,116; 6,851; 7,604; 9,165; 10,911; 12,043.
- Gross international reserves (in months of prospective imports): 0.7; 1.7; 2.2; 2.8; 4.0; 4.2.
- Nominal GDP (millions of GHc): 2022: 614,336; 2023: 841,633; 2024: 1,020,180; 2025: 1,183,394; 2026: 1,339,842; 2027: 1,518,046; 2028: 1,715,739; 2029: 1,937,351.
- Population Growth Rate (percentage): 2.6.
International Monetary Fund press release, June 28, 2024.
