{
  "title": "IMF Executive Board Concludes 2021 Article IV Consultation with Ghana",
  "publication": "IMF News, July 20, 2021",
  "sourceUrl": "https://www.imf.org/en/news/articles/2021/07/20/pr21221-ghana-imf-executive-board-concludes-2021-article-iv-consultation",
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  "summary": "The Executive Board concluded the Article IV consultation with Ghana on July 19, 2021.",
  "publishDate": "2021-07-20",
  "sections": [
    {
      "heading": "Pandemic impact and policy response",
      "content": "- The Executive Board concluded the Article IV consultation with Ghana on July 19, 2021.\n- The COVID-19 pandemic severely impacted economic activity: growth slowed to 0.4 percent in 2020 from 6.5 percent in 2019, food prices spiked, and poverty increased.\n- The government response helped contain the pandemic and support the economy but contributed to a record fiscal deficit and increased public debt vulnerabilities.\n- The fiscal deficit including energy and financial sector costs worsened to 15.2 percent of GDP in 2020, with a further 2.1 percent of GDP in additional spending financed through accumulation of domestic arrears.\n- Public debt rose to 79 percent of GDP in 2020.\n- External and domestic financing conditions tightened considerably at the start of the pandemic but improved subsequently; Ghana issued a US$3 billion Eurobond in March 2021.\n- The Ghanaian Cedi remained stable against the US dollar, partly due to central bank intervention, and gross international reserves remained at 3.2 months of imports."
    },
    {
      "heading": "Economic outlook and risks",
      "content": "- Growth is expected to rebound to 4.7 percent in 2021, supported by a strong cocoa season and mining and services activity; inflation is expected to remain within the Bank of Ghana target.\n- The current account deficit is projected to improve to 2.2 percent of GDP in 2021, supported by a pickup in oil prices; gross international reserves are expected to remain stable.\n- The 2021 budget envisages a fiscal deficit of 13.9 percent of GDP in 2021, including energy and financial sector costs, and a gradual medium-term fiscal adjustment that would support a decline in public debt starting in 2024.\n- Significant uncertainty surrounds the outlook, including from new pandemic waves and risks associated with large financing needs and increasing public debt."
    },
    {
      "heading": "Executive Board assessment — findings",
      "content": "- Directors agreed with the thrust of the staff appraisal and noted the pandemic’s severe impact: slower growth, higher food prices, and increased poverty.\n- Directors commended the authorities’ proactive COVID-19 response, while noting it contributed to a record fiscal deficit and increased public debt vulnerabilities.\n- While recovery signs are encouraging, Directors noted the recovery remains uneven across sectors.\n- Directors concurred that risks to Ghana’s capacity to repay have increased but are still manageable and Ghana’s capacity to repay the Fund remains adequate.\n- Directors noted the financial sector cleanup improved resilience but cautioned that banks’ growing holdings of sovereign debt create risks and crowd out private sector credit.\n- Directors welcomed improvements in the AML/CFT framework that allowed Ghana to exit the FATF “grey list.”"
    },
    {
      "heading": "Executive Board assessment — policy recommendations",
      "content": "- Entrench prudent macroeconomic policies, ensure debt sustainability, and press ahead with structural reforms to deliver a sustainable, inclusive, and green economic recovery.\n- Fiscal consolidation is needed to address debt sustainability and rollover risks; Ghana continues to be classified at high risk of debt distress.\n- To protect the most vulnerable, consider more progressive revenue measures and a faster return to the pre-pandemic level of spending, with a shift towards social, health, and development spending.\n- Encourage timely completion of the planned audit of COVID‑19 emergency spending and of new expenditure arrears.\n- Maintain a broadly appropriate monetary policy stance; adopt tighter policy if inflationary pressures materialize.\n- Guard against erosion of external buffers, remain committed to a flexible exchange rate regime, and limit monetary financing of the deficit.\n- Continue supervisory and regulatory reforms in the financial sector to protect financial stability.\n- Support structural transformation and digitalization agendas, including energy sector review, tourism diversification, and the digital transition to reduce corruption, boost tax revenues, and improve service delivery.\n- Continue capacity development efforts in these areas."
    },
    {
      "heading": "Key economic and financial indicators (2019–22)",
      "content": "- GDP at constant prices (annual percentage change): 2019: 6.5; 2020: 0.4; 2021: 4.7; 2022: 6.2\n- Non-oil GDP (annual percentage change): 2019: 5.8; 2020: 0.9; 2021: 6.4; 2022: 5.9\n- Oil and gas GDP (annual percentage change): 2019: 14.4; 2020: -4.6; 2021: -14.6; 2022: 10.3\n- Consumer price index (p.a.)1: 2019: 7.1; 2020: 9.9; 2021: 8.9; 2022: 8.5\n- Central government budget (cash basis) — Revenue (percent of GDP): 2019: 14.3; 2020: 12.9; 2021: 14.9; 2022: 15.0\n- Central government budget (cash basis) — Expenditure (percent of GDP): 2019: 21.8; 2020: 28.2; 2021: 28.9; 2022: 25.4\n- Central government budget (cash basis) — o/w financial and energy sector costs (percent of GDP): 2019: 2.7; 2020: 3.9; 2021: 1.0\n- Central government budget (cash basis) — Overall balance2 (percent of GDP): 2019: -7.5; 2020: -15.2; 2021: -13.9; 2022: -10.5\n- Central government budget (cash basis) — excl. financial and energy sector costs2 (percent of GDP): 2019: -4.7; 2020: -11.4; 2021: -10.0; 2022: -9.5\n- Primary balance2 (percent of GDP): 2019: -1.8; 2020: -8.8; 2021: -5.9; 2022: -1.4\n- Public debt (gross) (percent of GDP): 2019: 62.9; 2020: 78.9; 2021: 83.5; 2022: 84.9\n- Domestic debt3 (percent of GDP): 2019: 23.9; 2020: 34.2; 2021: 39.3; 2022: 40.1\n- External debt (percent of GDP): 2019: 39.0; 2020: 44.7; 2021: 44.2; 2022: 44.8\n- Credit to the private sector (annual percentage change): 2019: 10.6; 2020: 8.6; 2021: 7.8\n- Broad money (M2+) (annual percentage change): 2019: 21.6; 2020: 29.7; 2021: 22.1; 2022: 13.5\n- Current account balance (percent of GDP): 2019: -2.7; 2020: -3.1; 2021: -2.2; 2022: -3.5\n- Gross international reserves (US$ millions): 2019: 6,607; 2020: 6,962; 2021: 7,494; 2022: 7,435\n- Gross international reserves (in months of prospective imports): 2019: 3.4; 2020: 3.2; 2021: 3.0\n- Net international reserves (US$ millions)4: 2019: 5,247; 2020: 4,559; 2021: 5,212; 2022: 5,285\n- Memorandum item — Nominal GDP (GHS millions): 2019: 356,544; 2020: 383,486; 2021: 446,662; 2022: 510,652\n- Government debt excl. ESLA (% GDP): 2019: 61.2; 2020: 76.9; 2021: 81.9; 2022: (not listed)\n\nPress Release No. 21/221 — IMF Communications Department\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Ghana and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/07/20/pr21221-ghana-imf-executive-board-concludes-2021-article-iv-consultation"
    }
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    "Published: July 20, 2021",
    "The Executive Board concluded the Article IV consultation with Ghana on July 19, 2021.",
    "The COVID-19 pandemic severely impacted economic activity: growth slowed to 0.4 percent in 2020 from 6.5 percent in 2019, food prices spiked, and poverty increased.",
    "The government response helped contain the pandemic and support the economy but contributed to a record fiscal deficit and increased public debt vulnerabilities.",
    "The fiscal deficit including energy and financial sector costs worsened to 15.2 percent of GDP in 2020, with a further 2.1 percent of GDP in additional spending financed through accumulation of domestic arrears.",
    "Public debt rose to 79 percent of GDP in 2020.",
    "External and domestic financing conditions tightened considerably at the start of the pandemic but improved subsequently; Ghana issued a US$3 billion Eurobond in March 2021.",
    "The Ghanaian Cedi remained stable against the US dollar, partly due to central bank intervention, and gross international reserves remained at 3.2 months of imports.",
    "Growth is expected to rebound to 4.7 percent in 2021, supported by a strong cocoa season and mining and services activity; inflation is expected to remain within the Bank of Ghana target.",
    "The current account deficit is projected to improve to 2.2 percent of GDP in 2021, supported by a pickup in oil prices; gross international reserves are expected to remain stable.",
    "The 2021 budget envisages a fiscal deficit of 13.9 percent of GDP in 2021, including energy and financial sector costs, and a gradual medium-term fiscal adjustment that would support a decline in public debt starting in 2024.",
    "Significant uncertainty surrounds the outlook, including from new pandemic waves and risks associated with large financing needs and increasing public debt.",
    "Directors agreed with the thrust of the staff appraisal and noted the pandemic’s severe impact: slower growth, higher food prices, and increased poverty.",
    "Directors commended the authorities’ proactive COVID-19 response, while noting it contributed to a record fiscal deficit and increased public debt vulnerabilities.",
    "While recovery signs are encouraging, Directors noted the recovery remains uneven across sectors.",
    "Directors concurred that risks to Ghana’s capacity to repay have increased but are still manageable and Ghana’s capacity to repay the Fund remains adequate.",
    "Directors noted the financial sector cleanup improved resilience but cautioned that banks’ growing holdings of sovereign debt create risks and crowd out private sector credit.",
    "Directors welcomed improvements in the AML/CFT framework that allowed Ghana to exit the FATF “grey list.”",
    "Entrench prudent macroeconomic policies, ensure debt sustainability, and press ahead with structural reforms to deliver a sustainable, inclusive, and green economic recovery.",
    "Fiscal consolidation is needed to address debt sustainability and rollover risks; Ghana continues to be classified at high risk of debt distress.",
    "To protect the most vulnerable, consider more progressive revenue measures and a faster return to the pre-pandemic level of spending, with a shift towards social, health, and development spending.",
    "Encourage timely completion of the planned audit of COVID‑19 emergency spending and of new expenditure arrears.",
    "Maintain a broadly appropriate monetary policy stance; adopt tighter policy if inflationary pressures materialize.",
    "Guard against erosion of external buffers, remain committed to a flexible exchange rate regime, and limit monetary financing of the deficit.",
    "Continue supervisory and regulatory reforms in the financial sector to protect financial stability.",
    "Support structural transformation and digitalization agendas, including energy sector review, tourism diversification, and the digital transition to reduce corruption, boost tax revenues, and improve service delivery.",
    "Continue capacity development efforts in these areas.",
    "GDP at constant prices (annual percentage change): 2019: 6.5; 2020: 0.4; 2021: 4.7; 2022: 6.2",
    "Non-oil GDP (annual percentage change): 2019: 5.8; 2020: 0.9; 2021: 6.4; 2022: 5.9",
    "Oil and gas GDP (annual percentage change): 2019: 14.4; 2020: -4.6; 2021: -14.6; 2022: 10.3",
    "Consumer price index (p.a.)1: 2019: 7.1; 2020: 9.9; 2021: 8.9; 2022: 8.5",
    "Central government budget (cash basis) — Revenue (percent of GDP): 2019: 14.3; 2020: 12.9; 2021: 14.9; 2022: 15.0",
    "Central government budget (cash basis) — Expenditure (percent of GDP): 2019: 21.8; 2020: 28.2; 2021: 28.9; 2022: 25.4",
    "Central government budget (cash basis) — o/w financial and energy sector costs (percent of GDP): 2019: 2.7; 2020: 3.9; 2021: 1.0",
    "Central government budget (cash basis) — Overall balance2 (percent of GDP): 2019: -7.5; 2020: -15.2; 2021: -13.9; 2022: -10.5",
    "Central government budget (cash basis) — excl. financial and energy sector costs2 (percent of GDP): 2019: -4.7; 2020: -11.4; 2021: -10.0; 2022: -9.5",
    "Primary balance2 (percent of GDP): 2019: -1.8; 2020: -8.8; 2021: -5.9; 2022: -1.4",
    "Public debt (gross) (percent of GDP): 2019: 62.9; 2020: 78.9; 2021: 83.5; 2022: 84.9",
    "Domestic debt3 (percent of GDP): 2019: 23.9; 2020: 34.2; 2021: 39.3; 2022: 40.1",
    "External debt (percent of GDP): 2019: 39.0; 2020: 44.7; 2021: 44.2; 2022: 44.8",
    "Credit to the private sector (annual percentage change): 2019: 10.6; 2020: 8.6; 2021: 7.8",
    "Broad money (M2+) (annual percentage change): 2019: 21.6; 2020: 29.7; 2021: 22.1; 2022: 13.5",
    "Current account balance (percent of GDP): 2019: -2.7; 2020: -3.1; 2021: -2.2; 2022: -3.5",
    "Gross international reserves (US$ millions): 2019: 6,607; 2020: 6,962; 2021: 7,494; 2022: 7,435",
    "Gross international reserves (in months of prospective imports): 2019: 3.4; 2020: 3.2; 2021: 3.0",
    "Net international reserves (US$ millions)4: 2019: 5,247; 2020: 4,559; 2021: 5,212; 2022: 5,285",
    "Memorandum item — Nominal GDP (GHS millions): 2019: 356,544; 2020: 383,486; 2021: 446,662; 2022: 510,652",
    "Government debt excl. ESLA (% GDP): 2019: 61.2; 2020: 76.9; 2021: 81.9; 2022: (not listed)",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[Ghana and the IMF](http://www.imf.org/external/country/GHA/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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