The Executive Board of the International Monetary Fund (IMF) today
completed the fourth review of the arrangement under the Extended
Credit Facility (ECF). [1] Completion of the fourth ECF review enables the disbursement of SDR
66.42 million (about US$94.2 million), bringing total disbursements
under the arrangement to SDR 398.52 million (about US$565.2 million),
with the remainder being tied to the remaining reviews. The Board also
approved Ghana’s request for waivers of non-observance of performance
criteria, and modification of one performance criterion; and the
extension of the arrangement by one year.
Ghana’s three-year arrangement for SDR 664.20 million (about US$918
million or 180 percent of quota at the time of approval of the
arrangement) was approved on April 3, 2015 (see
Press Release No.15/159). It aims to restore debt sustainability and macroeconomic stability
in the country to foster a return to high growth and job creation,
while protecting social spending.
Following the Executive Board discussion, Mr. Tao Zhang, Deputy
Managing Director and Acting Chair, made the following statement:
Ghana’s macroeconomic performance over the years has been mixed. Policy
slippages have compounded the adverse impact of shocks and resulted in
significant external and domestic imbalances. The new government has
committed to macroeconomic stability, fiscal discipline, and an
ambitious reform agenda. Decisive implementation of these policies and
reforms would allow Ghana to reap its economic potential and achieve
higher and more inclusive growth rates. These efforts will be supported
by the continued implementation of the ECF program.
“The authorities have taken some encouraging steps and the economy is
showing signs of recovery. As risks remain tilted to the downside,
careful fiscal management will be required to achieve the 2017 program
targets and reverse the unfavorable debt dynamics. Additional efforts
are needed to address revenue shortfalls, while expenditure control
measures should be fully enforced to contain current spending, and
prevent the recurrence of domestic arrears. Ongoing fiscal
consolidation and implementation of the medium-term debt management
strategy will be key to further reducing domestic refinancing risks.
“Fiscal consolidation efforts will need to be anchored in wide-ranging
structural fiscal reforms, so that consolidation gains can be sustained
over the medium term. These include measures to broaden the tax base,
and enhance tax compliance and public financial management, especially
considering the large unpaid commitments accumulated in 2016.
“The authorities should tackle energy sector inefficiencies,
particularly improving the management of the state-owned enterprises
(SOEs). Ongoing debt restructuring efforts are helpful but are no
substitute to stemming the SOEs’ ongoing financial losses and put them
on a sustainable financial path.
“As inflation continues to decelerate, the Bank of Ghana (BoG) should
remain vigilant in order to bring inflation back to target. The BoG
should continue to strengthen the credibility of the
inflation-targeting framework, which would benefit from efforts in the
development of the foreign exchange market. The central bank should
also continue its policy on zero financing of the government.
“The authorities have made significant progress in the implementation
of the banking system roadmap, in particular through the approval of
timebound recapitalization plans for banks found to be
undercapitalized, and the resolution of two insolvent banks. Further
steps to strengthen the supervisory and regulatory framework, reduce
outstanding liquidity assistance, and buttress the microfinance sector
will help build a more robust financial sector that is well positioned
to support growth and promote financial inclusion.”
The Executive Board also completed the 2017 Article IV Consultation [2] with Ghana.
Ghana has shown mixed macroeconomic performance in recent years, with
significant shocks being amplified by policy slippages and resulting
external and domestic imbalances. Growth in 2016 was 3.5 percent, the
lowest level in two decades. A recovery of growth is expected in
2017-18, owing to an increase in oil production, declining inflation,
and lower imbalances with the right policy implementation.
Following a sizeable fiscal slippage in 2016, the authorities are
targeting a significant fiscal consolidation in 2017, which will
require sustained revenue collections and spending controls. Inflation
has continued to decline and the exchange rate has been broadly stable.
The external position has continued to improve, supported by strong
foreign investors’ participation in the domestic debt market.
Over the medium term, both the fiscal deficit and the current account
deficit are projected to decline gradually.
Executive Board Assessment [3]
Executive Directors agreed with the thrust of the staff appraisal. They
commended the corrective actions taken by the new government to bring
the program back on track following the large fiscal slippages in 2016.
However, Directors noted that Ghana faces long‑standing challenges,
including exposure to external shocks, budget rigidities, and economic
inefficiencies, which have amplified the impact of past policy
slippages on domestic and external imbalances. They emphasized that
strong implementation of program policies and reforms is critical to
address the risks and secure macroeconomic stability. Directors also
cautioned about program implementation risks given the revenue
underperformance that occurred in the first half of the year, and urged
the authorities to expeditiously adopt corrective measures, as needed,
to preserve the program targets.
Directors emphasized the need for prudent fiscal adjustment and
welcomed the targeted efforts being made to reverse the debt dynamics
and reduce financing needs. They underscored that efforts are needed to
address revenue shortfalls, while enforcing expenditure control
measures to contain current spending and prevent the recurrence of
domestic arrears accumulation. Directors stressed that credible fiscal
consolidation and implementation of the medium‑term debt management
strategy will be key to further reducing domestic refinancing risks.
Directors welcomed the wide‑ranging reforms in revenue administration
and public financial management, noting that these will be essential to
make consolidation gains sustainable over the medium term and create
fiscal space for priority spending programs. Addressing the
shortcomings in spending controls will be essential to deliver lasting
adjustment and anchor the credibility of government’s budget policies.
Directors emphasized the need to tackle energy sector inefficiencies,
particularly improving the management of the state‑owned enterprises
(SOEs). They also advised that ongoing debt restructuring efforts are
helpful but are no substitute to stemming the SOEs’ financial losses.
Directors welcomed the deceleration in inflation and encouraged the
Bank of Ghana (BoG) to remain vigilant and take action to bring it back
to target. They also called for measures to further strengthen the
credibility of the inflation targeting framework, which would benefit
from efforts in the development of the foreign exchange market and
continuation of BoG’s policy on zero financing of the government.
Directors commended the progress made in the strengthening the banking
system, in particular through the approval of timebound
recapitalization plans for undercapitalized banks and the recent
resolution of two insolvent banks. They called for further steps to
strengthen the supervisory and regulatory framework to address
liquidity risks and rising levels of NPLs. Directors also encouraged
action to further strengthen the AML/CFT framework.
Directors emphasized that wide‑ranging structural reforms remain
important for achieving higher and inclusive growth. They highlighted
that the reform effort should include further enhancing the business
environment, improving infrastructure, including tackling the
inefficiencies in the energy sector, and improving access to finance.
It is expected that the next Article IV consultation with Ghana will
take place in accordance with the Executive Board Decision on
consultation cycles for members with Fund arrangement.
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Table 1. Ghana: Selected Economic and
Financial Indicators, 2014–22
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2014
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2015
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2016
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2017
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2018
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2019
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2020
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2021
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2022
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Prog.
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Est.
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Prog.
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Proj.
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Proj.
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Proj.
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Proj.
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Proj.
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Proj.
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(Annual percentage change; unless otherwise indicated)
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National accounts and prices
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GDP at constant prices
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4.0
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3.8
|
3.3
|
3.5
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7.4
|
5.9
|
8.9
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5.9
|
5.1
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5.2
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5.4
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Non-oil GDP
|
4.0
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4.0
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3.7
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4.8
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4.5
|
4.0
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5.0
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6.0
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6.0
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6.0
|
6.0
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Oil and gas GDP
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4.5
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0.9
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-2.4
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-16.9
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57.0
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42.5
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64.9
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5.5
|
-3.1
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-2.7
|
-1.7
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Real GDP per capita
|
1.4
|
1.2
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0.8
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0.9
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4.7
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3.3
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6.1
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3.3
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2.5
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2.6
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2.7
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GDP deflator
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16.7
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16.4
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15.3
|
18.1
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10.1
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14.2
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9.6
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9.1
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7.4
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6.3
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6.3
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Consumer price index (annual average)
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15.5
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17.2
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17.1
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17.5
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10.0
|
11.8
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9.0
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7.0
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6.0
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6.0
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6.0
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Consumer price index (end of period)
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17.0
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17.7
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13.5
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15.4
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8.0
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10.0
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8.0
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6.0
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6.0
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6.0
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6.0
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Consumer price index (excl. food, end of
period)
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23.9
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23.3
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17.8
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20.2
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10.5
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13.1
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8.0
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6.0
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6.0
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6.0
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6.0
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(Percent of GDP)
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Gross capital formation1
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18.8
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16.7
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22.5
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14.5
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23.2
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13.7
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14.7
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15.8
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17.0
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18.2
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18.2
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Government
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5.7
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5.2
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3.1
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4.9
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2.9
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3.2
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3.3
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3.5
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3.7
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3.8
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3.9
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Private
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12.3
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10.7
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18.7
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8.9
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19.7
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9.9
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10.9
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11.9
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12.9
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14.0
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14.0
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National savings
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9.3
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9.0
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16.1
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7.8
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17.1
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7.9
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9.2
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10.7
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12.3
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13.6
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13.9
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Government
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-5.3
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-0.2
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-0.7
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-4.0
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0.9
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-1.3
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-0.5
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0.2
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0.6
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0.9
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1.1
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Private2
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14.6
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9.2
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16.8
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11.8
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16.2
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9.2
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9.7
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10.5
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11.6
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12.8
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12.8
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Foreign savings
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-9.5
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-7.7
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-6.4
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-6.7
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-6.1
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-5.8
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-5.4
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-5.0
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-4.7
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-4.5
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-4.3
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Central government budget (cash basis)
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Revenue
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18.4
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19.6
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19.4
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17.3
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19.2
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18.9
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18.6
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19.0
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19.1
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18.9
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18.7
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Expenditure
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28.5
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26.6
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24.6
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26.6
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22.7
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25.2
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22.4
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22.2
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22.1
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21.8
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21.6
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Overall balance3
|
-10.1
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-7.0
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-5.2
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-9.3
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-3.5
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-6.3
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-3.8
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-3.2
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-3.1
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-2.9
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-2.8
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Primary balance3
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0.0
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-0.4
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1.1
|
-2.4
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2.2
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0.2
|
2.2
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2.2
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2.0
|
1.8
|
1.6
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Net domestic financing
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7.8
|
1.8
|
3.7
|
8.6
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2.3
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6.2
|
3.6
|
3.2
|
2.7
|
2.3
|
1.9
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Central government debt (gross)
|
70.2
|
72.2
|
67.7
|
73.4
|
63.6
|
70.5
|
66.1
|
62.8
|
60.1
|
57.6
|
55.1
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Domestic debt
|
31.0
|
28.5
|
27.9
|
32.1
|
26.0
|
32.5
|
30.8
|
29.8
|
29.1
|
28.4
|
27.2
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External debt
|
39.1
|
43.7
|
39.8
|
41.3
|
37.7
|
38.0
|
35.3
|
33.0
|
30.9
|
29.2
|
27.8
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(Annual percentage change; unless otherwise indicated)
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Money and credit
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|
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Credit to the private sector
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41.8
|
31.7
|
7.4
|
9.1
|
14.2
|
11.0
|
14.5
|
19.9
|
20.5
|
17.3
|
20.2
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Broad money (M2+)
|
36.8
|
23.3
|
14.4
|
24.8
|
15.1
|
22.7
|
15.9
|
19.2
|
21.0
|
16.4
|
16.5
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Velocity (GDP/M2+, end of period)
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3.1
|
3.0
|
…
|
2.9
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…
|
2.9
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3.0
|
2.9
|
2.7
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2.6
|
2.5
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Base money
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30.2
|
24.2
|
14.7
|
29.6
|
15.7
|
26.3
|
19.2
|
17.5
|
18.3
|
16.9
|
14.9
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Banks' lending rate (weighted average,
percent)
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29.0
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27.5
|
…
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31.7
|
…
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…
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…
|
…
|
…
|
…
|
…
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Policy rate (in percent, end of period)
|
21.0
|
26.0
|
…
|
25.5
|
…
|
…
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…
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…
|
…
|
…
|
…
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(Percent of GDP)
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|
External sector
|
|
|
|
|
|
|
|
|
|
|
|
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Current account balance
|
-9.5
|
-7.7
|
-6.4
|
-6.7
|
-6.1
|
-5.8
|
-5.4
|
-5.0
|
-4.7
|
-4.5
|
-4.3
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|
Gross international reserves (millions of US$)
|
4,349
|
4,403
|
5,140
|
4,862
|
5,976
|
5,783
|
6,319
|
6,797
|
7,483
|
8,145
|
8,765
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|
In months of prospective imports of goods
and services
|
2.5
|
2.6
|
2.7
|
2.6
|
2.9
|
3.0
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3.1
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3.2
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3.3
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3.3
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3.4
|
|
Total donor support (millions of US$)
|
1,092
|
1,411
|
844
|
778
|
637
|
977
|
755
|
763
|
407
|
183
|
133
|
|
In percent of GDP
|
2.8
|
3.8
|
2.0
|
1.8
|
1.4
|
2.1
|
1.5
|
1.4
|
0.7
|
0.3
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
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Memorandum items:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominal GDP (millions of GHc)
|
113,343
|
136,957
|
166,768
|
167,315
|
197,136
|
202,389
|
241,549
|
279,328
|
315,464
|
352,989
|
395,193
|
|
Nominal GDP (millions of US$)
|
38,774
|
36,893
|
42,638
|
42,778
|
…
|
45,464
|
49,226
|
52,863
|
56,415
|
60,449
|
65,127
|
|
GDP per capita (US$)
|
1,479
|
1,372
|
1,551
|
1,551
|
1,648
|
1,608
|
1,697
|
1,777
|
1,850
|
1,932
|
2,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sources: Ghanaian authorities; and Fund staff estimates and
projections.
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1 Historical expenditure side GDP series was revised in
2017 by the Ghana Statistical Services.
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2 Including public enterprises.
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3 Excludes discrepancy.
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