IMF Executive Board Completes Fourth Review Under the ECF, Approves US$94.2 Million Disbursement and Program Extension; and Concludes 2017 Article IV Consultation with Ghana
IMF News, August 30, 2017
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- Published: August 30, 2017
Fourth ECF Review, Disbursement, Waivers, and Extension
- Completion of the fourth ECF review enables the disbursement of SDR 66.42 million (about US$94.2 million).
- Total disbursements under the arrangement to date: SDR 398.52 million (about US$565.2 million).
- The remainder of the arrangement is tied to the remaining reviews.
- The Board approved Ghana’s request for waivers of non-observance of performance criteria, and modification of one performance criterion.
- The arrangement was extended by one year.
- Original three-year arrangement size: SDR 664.20 million (about US$918 million or 180 percent of quota at the time of approval).
- Original approval date of the arrangement: April 3, 2015.
Program Objectives and Rationale
- Program aim: restore debt sustainability and macroeconomic stability; foster return to high growth and job creation; protect social spending.
- The ECF provides sustained program engagement for protracted balance of payments problems.
Staff/Management Statement and Policy Priorities (Tao Zhang)
- Ghana’s macroeconomic performance has been mixed; policy slippages compounded shocks and produced significant external and domestic imbalances.
- New government committed to macroeconomic stability, fiscal discipline, and an ambitious reform agenda; decisive implementation required to achieve higher and more inclusive growth.
- Policy priorities and recommendations:
- Careful fiscal management to achieve the 2017 program targets and reverse unfavorable debt dynamics.
- Address revenue shortfalls and fully enforce expenditure control measures to contain current spending and prevent recurrence of domestic arrears.
- Continue fiscal consolidation and implementation of medium-term debt management strategy to reduce domestic refinancing risks.
- Anchor fiscal consolidation in wide-ranging structural fiscal reforms: broaden the tax base, enhance tax compliance, and improve public financial management (noting large unpaid commitments accumulated in 2016).
- Tackle energy sector inefficiencies and improve management of state-owned enterprises (SOEs); debt restructuring is helpful but not a substitute for stemming SOEs’ financial losses.
- As inflation decelerates, Bank of Ghana (BoG) should remain vigilant to bring inflation back to target; strengthen credibility of the inflation-targeting framework and develop the foreign exchange market.
- Continue BoG policy on zero financing of the government.
- Continue implementation of the banking system roadmap: timebound recapitalization plans for undercapitalized banks, resolution of insolvent banks, strengthen supervision and regulation, reduce outstanding liquidity assistance, and bolster the microfinance sector.
Economic Outlook and Recent Performance
- Growth:
- 2016 growth: 3.5 percent (lowest in two decades).
- Recovery expected in 2017–18 owing to increased oil production, declining inflation, and lower imbalances with right policy implementation.
- Fiscal:
- Sizeable fiscal slippage in 2016 followed by target of significant fiscal consolidation in 2017 requiring sustained revenue collections and spending controls.
- Inflation and exchange rate:
- Inflation has continued to decline.
- Exchange rate broadly stable.
- External:
- External position improved, supported by strong foreign investor participation in the domestic debt market.
- Medium-term projection:
- Both the fiscal deficit and the current account deficit are projected to decline gradually.
Executive Board Assessment
- Directors agreed with staff appraisal and commended corrective actions by the new government to bring the program back on track after 2016 fiscal slippages.
- Directors’ concerns and recommendations:
- Noted long-standing challenges: exposure to external shocks, budget rigidities, and economic inefficiencies amplifying past slippages.
- Emphasized strong implementation of program policies and reforms to address risks and secure macroeconomic stability.
- Cautioned about implementation risks given revenue underperformance in first half of the year; urged expeditious corrective measures to preserve program targets.
- Emphasized prudent fiscal adjustment and welcomed targeted efforts to reverse debt dynamics and reduce financing needs.
- Urged addressing revenue shortfalls and enforcing expenditure control to contain current spending and prevent domestic arrears.
- Welcomed wide-ranging reforms in revenue administration and public financial management as essential for sustainable consolidation gains and fiscal space for priority spending.
- Emphasized tackling energy sector inefficiencies and improving SOE management; noted debt restructuring is not a substitute for stopping SOE losses.
- Encouraged BoG vigilance on inflation, strengthening of inflation-targeting credibility, foreign exchange market development, and continuation of zero government financing.
- Commended progress in banking system strengthening (timebound recapitalization plans, resolution of two insolvent banks); called for further steps to strengthen supervision/regulation, address liquidity risks and rising NPLs, and strengthen the AML/CFT framework.
- Highlighted the importance of wide-ranging structural reforms for higher and inclusive growth: enhance business environment, improve infrastructure, address energy sector inefficiencies, and improve access to finance.
Selected Economic and Financial Indicators (2014–22) — Key Figures from Table 1
- GDP at constant prices (annual % change)
- 2014: 4.0
- 2015: 3.8
- 2016: 3.3
- 2017 Prog./Est.: 3.5
- 2018 Proj.: 7.4
- 2019 Proj.: 5.9
- 2020 Proj.: 8.9
- 2021 Proj.: 5.1
- 2022 Proj.: 5.2
- 2023 Proj.: 5.4
- Non-oil GDP (annual % change)
- 2014: 3.7
- 2015: 4.8
- 2016: 4.5
- 2017: 5.0
- 2018: 6.0
- Oil and gas GDP (annual % change)
- 2014: 0.9
- 2015: -2.4
- 2016: -16.9
- 2017: 57.0
- 2018: 42.5
- 2019: 64.9
- Real GDP per capita
- 2014: 1.4
- 2015: 1.2
- 2016: 0.8
- 2017: 4.7
- 2018: 6.1
- GDP deflator
- 2014: 16.7
- 2015: 16.4
- 2016: 15.3
- 2017: 18.1
- 2018: 10.1
- Consumer price index (annual average)
- 2014: 15.5
- 2015: 17.2
- 2016: 17.1
- 2017: 17.5
- 2018: 10.0
- Gross capital formation (percent of GDP)
- 2014: 18.8
- 2015: 22.5
- 2016: 14.5
- 2017: 23.2
- 2018: 13.7
- 2019: 14.7
- 2020: 15.8
- 2021: 18.2
- National savings (percent of GDP)
- 2014: 9.3
- 2015: 16.1
- 2016: 7.8
- 2017: 7.9
- 2018: 9.2
- 2019: 13.6
- 2020: 13.9
- Foreign savings (percent of GDP)
- 2014: -9.5
- 2015: -7.7
- 2016: -6.4
- 2017: -6.7
- 2018: -6.1
- 2019: -5.8
- 2020: -5.4
- 2021: -5.0
- 2022: -4.7
- 2023: -4.5
- 2024: -4.3
- Central government budget (cash basis) — Revenue (percent of GDP)
- 2014: 18.4
- 2015: 19.6
- 2016: 19.4
- 2017: 17.3
- 2018: 19.2
- 2019: 18.9
- 2020: 18.6
- 2021: 19.0
- 2022: 19.1
- Central government expenditure (percent of GDP)
- 2014: 28.5
- 2015: 26.6
- 2016: 24.6
- 2017: 22.7
- 2018: 25.2
- 2019: 22.4
- 2020: 22.2
- 2021: 22.1
- 2022: 21.8
- 2023: 21.6
- Overall balance (percent of GDP)3
- 2014: -10.1
- 2015: -7.0
- 2016: -5.2
- 2017: -9.3
- 2018: -3.5
- 2019: -6.3
- 2020: -3.8
- 2021: -3.2
- 2022: -2.9
- 2023: -2.8
- Primary balance (percent of GDP)3
- 2014: 0.0
- 2015: -0.4
- 2016: 2.2
- 2017: 2.0
- 2018: 1.8
- 2019: 1.6
- Net domestic financing
- 2014: 8.6
- 2015: 2.3
- 2016: 6.2
- 2017: 3.6
- 2018: 1.9
- Central government debt (gross, percent of GDP)
- 2014: 70.2
- 2015: 72.2
- 2016: 67.7
- 2017: 73.4
- 2018: 63.6
- 2019: 70.5
- 2020: 66.1
- 2021: 62.8
- 2022: 60.1
- 2023: 57.6
- 2024: 55.1
- Domestic debt (percent of GDP)
- 2014: 31.0
- 2015: 27.9
- 2016: 32.1
- 2017: 26.0
- 2018: 32.5
- 2019: 30.8
- 2020: 29.8
- 2021: 29.1
- 2022: 28.4
- 2023: 27.2
- External debt (percent of GDP)
- 2014: 39.1
- 2015: 43.7
- 2016: 39.8
- 2017: 41.3
- 2018: 37.7
- 2019: 38.0
- 2020: 35.3
- 2021: 33.0
- 2022: 30.9
- 2023: 29.2
- 2024: 27.8
- Credit to the private sector (annual % change)
- 2014: 41.8
- 2015: 31.7
- 2016: 11.0
- 2017: 19.9
- 2018: 20.5
- 2019: ?? (table continues with projections)
- Broad money (M2+) (annual % change)
- 2014: 36.8
- 2015: 14.4
- 2016: 24.8
- 2017: 15.1
- 2018: 15.9
- 2019: 21.0
- 2020: 16.5
- Banks' lending rate (weighted average, percent)
- 2014: 29.0
- 2015: 27.5
- Policy rate (percent, end of period)
- 2014: 25.5
- Gross international reserves (millions of US$)
- 2014: 4,349
- 2015: 4,403
- 2016: 5,140
- 2017: 4,862
- 2018: 5,976
- 2019: 5,783
- 2020: 6,319
- 2021: 6,797
- 2022: 7,483
- 2023: 8,145
- 2024: 8,765
- In months of prospective imports of goods and services: 3.4 (most recent table entry)
- Total donor support (millions of US$)
- 2014: 1,092
- 2015: 1,411
- 2016: 844
- 2017: 778
- 2018: 637
- 2019: 977
- 2020: 755
- 2021: 763
- 2022: 407
- 2023: 183
- 2024: 133
- In percent of GDP: 2.8; 2.1; 1.5; 0.7; 0.3 (table series)
Memorandum items:
- Nominal GDP (millions of GHc)
- 2014: 113,343
- 2015: 136,957
- 2016: 166,768
- 2017: 167,315
- 2018: 197,136
- 2019: 202,389
- 2020: 241,549
- 2021: 279,328
- 2022: 315,464
- 2023: 352,989
- 2024: 395,193
- Nominal GDP (millions of US$)
- 2014: 38,774
- 2015: 36,893
- 2016: 42,638
- 2017: 42,778
- 2018: 45,464
- 2019: 49,226
- 2020: 52,863
- 2021: 56,415
- 2022: 60,449
- 2023: 65,127
- GDP per capita (US$)
- 2014: 1,479
- 2015: 1,372
- 2016: 1,551
- 2017: 1,648
- 2018: 1,608
- 2019: 1,697
- 2020: 1,777
- 2021: 1,850
- 2022: 1,932
- 2023: 2,030
Source: Press Release No. 17/337, August 30, 2017.