{
  "title": "IMF Survey: IMF Helps Ghana Learn From Others on Inflation Targets",
  "publication": "IMF News, February 14, 2008",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/socar021408a",
  "canonical": "https://www.imf.org/en/news/articles/2015/09/28/04/53/socar021408a",
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  "summary": "The IMF is sharing its cross-country experience in inflation targeting with Ghana as the country adapts its monetary policy and aims to reach middle-income status by 2015.",
  "authors": [
    "Maureen Burke IMF Survey"
  ],
  "publishDate": "2008-02-14",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Ghana formally adopted an inflation targeting framework in May 2007, announcing price stability as the central bank's primary objective.\n- The IMF shared cross-country experience on inflation targeting with a four-person delegation from the Bank of Ghana, who studied models used in Brazil, Turkey, South Africa, Chile, and other countries.\n- Ghana aims to reach middle-income status by 2015."
    },
    {
      "heading": "Institutional reforms and the inflation-targeting framework",
      "content": "- Key legislative and institutional changes:\n  - Bank of Ghana Act 2002 gave operational independence to the central bank and created a Monetary Policy Committee (MPC).\n  - The Act established an implicit inflation targeting framework that later became formal policy.\n- Operational features of Ghana's inflation-targeting regime:\n  - Monetary and fiscal authorities have a joint institutional commitment to price stability as the primary goal of monetary policy.\n  - The numerical target range for inflation is announced in the context of the annual budget.\n  - The Bank of Ghana communicates regularly with the public and the markets about its goals and decisions.\n  - The current medium-term goal is around 5 percent inflation."
    },
    {
      "heading": "Cross-country lessons and comparative experience",
      "content": "- Delegation insights and comparative focuses:\n  - Brazil and Chile: important case studies because of fiscal responsibility laws; Ghana is assessing how such laws were formulated and what might work for Ghana.\n  - South Africa: studied for its well-established inflation targeting system as a regional model.\n  - Nigeria: examined for oil-exporting country experience and for IMF-developed modeling; with Ghana's recent oil discovery, Nigeria's experience is expected to become relevant.\n  - Turkey: observed for how it brought inflation down to below 10 percent in an economy with similar structures and challenges.\n- Broad lesson emphasized by the delegation:\n  - The role of fiscal policy is critical in efforts to break the single-digit inflation barrier."
    },
    {
      "heading": "Macroeconomic outcomes, growth, and risks",
      "content": "- Historical macroeconomic context and outcomes:\n  - At the beginning of the decade, Ghana faced high inflation, large fiscal and external deficits, and high external and domestic debt.\n  - In 1998-99, Ghana registered a poverty rate of around 58 percent.\n  - Domestic debt decreased from about 31 percent of GDP in 2001 to 13.5 percent in 2006.\n  - Inflation declined from about 62 percent in 2001 to around 12.7 percent today.\n  - Ghana's economy has been growing at an average of over 6 percent a year.\n  - With lower inflation, better fiscal discipline, and slightly higher growth—around 7.5-8 percent a year—the government could meet its goal of achieving middle-income status by 2015.\n  - Poverty is now less than half its level of the late 1990s, and Ghana is on track to meet the Millennium Development Goal for poverty reduction.\n- Recent financing and associated risks:\n  - In late 2007, the Ghanaian government issued a $750 million sovereign bond to finance infrastructure investment in energy and transport via public-private partnerships.\n  - Acknowledged trade-offs: taking on more debt entails some risk given past debt relief under the Heavily Indebted Poor Countries and the Multilateral Debt Relief Initiatives.\n  - The government remains vigilant to preserve debt sustainability and focuses macroeconomic policy on keeping Ghana's total debt—both external and domestic—sustainable.\n- Forward-looking considerations:\n  - Oil discovery implies that in \"3 to 4 years\" Ghana will begin factoring in oil revenue, making some aspects of Nigeria's experience increasingly relevant."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Maintain fiscal discipline as a complement to inflation targeting; fiscal policy is crucial to achieving single-digit inflation.\n- Consider adopting fiscal responsibility laws modeled on relevant international examples (e.g., Brazil, Chile), adapted to Ghana's institutional context.\n- Preserve central bank operational independence and transparent communication to strengthen accountability for inflation targets.\n- Use revenue from the $750 million sovereign bond to prioritize \"growth-catalytic\" infrastructure (energy and transport) developed through public-private partnerships, while monitoring debt sustainability.\n- Study comparable emerging market experiences (Turkey, South Africa, Brazil, Chile, Nigeria) to tailor policy design as Ghana transitions toward an oil-influenced economy.\n\nIMF Survey: IMF Helps Ghana Learn From Others on Inflation Targets — February 14, 2008\n\n---\n\n\n References\n\n- https://www.imf.org/en/News/country-focus\n- PRESS CENTER\n- IMF Country Focus\n- Ghana and the IMF\n- Read the IMF assessment\n- Investors turn to Africa\n- African stock markets join boom\n- Africa's better policies pay off\n- Review of IMF programs in Ghana\n- Regional outlook\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/socar021408a"
    }
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    "Authors: Maureen Burke IMF Survey",
    "Published: February 14, 2008",
    "Ghana formally adopted an inflation targeting framework in May 2007, announcing price stability as the central bank's primary objective.",
    "The IMF shared cross-country experience on inflation targeting with a four-person delegation from the Bank of Ghana, who studied models used in Brazil, Turkey, South Africa, Chile, and other countries.",
    "Ghana aims to reach middle-income status by 2015.",
    "Key legislative and institutional changes:",
    "Operational features of Ghana's inflation-targeting regime:",
    "Delegation insights and comparative focuses:",
    "Broad lesson emphasized by the delegation:",
    "Historical macroeconomic context and outcomes:",
    "Recent financing and associated risks:",
    "Forward-looking considerations:",
    "Maintain fiscal discipline as a complement to inflation targeting; fiscal policy is crucial to achieving single-digit inflation.",
    "Consider adopting fiscal responsibility laws modeled on relevant international examples (e.g., Brazil, Chile), adapted to Ghana's institutional context.",
    "Preserve central bank operational independence and transparent communication to strengthen accountability for inflation targets.",
    "Use revenue from the $750 million sovereign bond to prioritize \"growth-catalytic\" infrastructure (energy and transport) developed through public-private partnerships, while monitoring debt sustainability.",
    "Study comparable emerging market experiences (Turkey, South Africa, Brazil, Chile, Nigeria) to tailor policy design as Ghana transitions toward an oil-influenced economy.",
    "[https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[IMF Country Focus](https://www.imf.org/en/news/country-focus)",
    "[Ghana and the IMF](https://www.imf.org/external/country/GHA/index.htm)",
    "[Read the IMF assessment](https://www.imf.org/external/pubs/cat/longres.cfm?sk=21098.0)",
    "[Investors turn to Africa](https://www.imf.org/external/pubs/ft/survey/so/2008/CAR012A.htm)",
    "[African stock markets join boom](https://www.imf.org/external/pubs/ft/survey/so/2007/CAR1012A.htm)",
    "[Africa's better policies pay off](https://www.imf.org/external/pubs/ft/survey/so/2007/INT0628A.htm)",
    "[Review of IMF programs in Ghana](https://www.imf.org/external/pubs/cat/longres.cfm?sk=21099.0)",
    "[Regional outlook](https://www.imf.org/external/pubs/ft/reo/2007/AFR/ENG/sreo1007.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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