Washington, DC: The Executive Board of the International
Monetary Fund (IMF) approved a 36-month arrangement under the Extended
Credit Facility (ECF) in an amount equivalent to SDR 2.242 billion (around
US$3 billion, or 304 percent of quota). The program is based on the
government’s Post COVID-19 Program for Economic Growth (PC-PEG), which aims
to restore macroeconomic stability and debt sustainability and includes
wide-ranging reforms to build resilience and lay the foundation for
stronger and more inclusive growth.
The Executive Board’s decision will enable an immediate disbursement to
Ghana equivalent to SDR 451.4 million (about US$600 million).
Large external shocks in recent years have exacerbated Ghana’s pre-existing
fiscal and debt vulnerabilities, resulting in a loss of international
market access, increasingly constrained domestic financing, and reliance on
monetary financing of the government. Decreasing international reserves,
Cedi depreciation, rising inflation and plummeting domestic investor
confidence, eventually triggered an acute crisis. The authorities have
taken bold steps to tackle these deep challenges, including by accelerating
fiscal adjustment. The government has also launched a comprehensive debt
restructuring to address severe financing constraints and the unsustainable
public debt. Securing timely debt restructuring agreements with external
creditors will be essential for the successful implementation of the new
ECF arrangement.
Key policies under the authorities’ program include large and frontloaded
fiscal consolidation to bring public finances back on a sustainable path,
complemented by efforts to protect the vulnerable. The adjustment effort
will be supported by ambitious structural reforms in the areas of tax
policy, revenue administration, and public financial management, as well as
steps to address weaknesses in the energy and cocoa sectors. Appropriately
tight monetary and flexible exchange rate policies will help bring
inflation back to single digits and rebuild international reserves. The
program also has a strong focus on preserving financial stability and
encouraging private investment and growth.
The program will help Ghana overcome immediate policy and financing
challenges, including through its catalytic effect in mobilizing external
financing from development partners and providing a framework for the
successful completion of the ongoing debt restructuring.
Following the Executive Board discussion on Ghana, Ms. Kristalina
Georgieva, Managing Director, issued the following statement:
“The combination of large external shocks and preexisting fiscal and debt
vulnerabilities precipitated a deep economic and financial crisis in Ghana.
In response, the authorities have launched a comprehensive reform program,
to be supported by the ECF-arrangement. It is focused on restoring
macroeconomic stability and debt sustainability as well as implementing
wide-ranging reforms to build resilience and lay the foundation for
stronger and more inclusive growth. Capacity development and continued
support by development partners would be critical for the successful
implementation of the authorities’ program.
“Fiscal consolidation is a core element of the program. A substantial and
front-loaded fiscal adjustment has started with the 2023 budget. Enhanced
revenue and streamlined expenditure will be combined with policies to
protect vulnerable households and create room for higher social and
development spending in the medium term. With a view to fostering lasting
fiscal discipline, the authorities are also advancing reforms to enhance
domestic revenue mobilization, strengthen public financial management, and
tackle the deep challenges in the energy and cocoa sectors. The government
has also launched a comprehensive debt restructuring, including both
domestic and external debt, to place debt on a sustainable path. Effective
collaboration by all parties involved would be critical.
“Preserving financial sector stability is critical for the success of the
program. Given the adverse impact of the domestic debt restructuring on
balance sheets of financial institutions, the authorities will devise and
implement a comprehensive strategy to rapidly rebuild financial
institutions’ buffers and exit from temporary regulatory forbearance
measures.
“Monetary and exchange rate policies under the program will focus on
reining in inflation and rebuilding foreign reserve buffers. The Bank of
Ghana will continue tightening monetary policy until inflation is on a
firmly declining path and will eliminate monetary financing of the budget.
The central bank will also enhance exchange rate flexibility and limit
foreign exchange interventions to rebuild external buffers.
“An ambitious structural reform agenda is being put in place to
reinvigorate private sector-led growth by improving the business
environment, governance, and productivity.”
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Ghana: Selected Economic and Financial
Indicators, 2021-27
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2021
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2022
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2023
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2024
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2025
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2026
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2027
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Actual
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Est.
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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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5.4
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3.2
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1.5
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2.8
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4.7
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5.0
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5.0
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Non-extractive GDP
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8.4
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1.9
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0.7
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2.2
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4.4
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4.8
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5.0
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Extractive GDP
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-12.1
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12.7
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6.1
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6.4
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6.5
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5.9
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5.0
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Real GDP per capita
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3.3
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1.0
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-1.1
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0.2
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2.1
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2.3
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2.4
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GDP deflator
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11.2
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29.8
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39.9
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20.1
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10.9
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7.6
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7.6
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Consumer price index (end of period)
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12.6
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54.1
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29.4
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15.0
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8.0
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8.0
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8.0
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Consumer price index (annual average)
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10.0
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31.9
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44.0
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22.2
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11.5
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8.0
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8.0
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(percent of GDP, unless otherwise indicated)
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Central government budget
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Revenue
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15.3
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15.7
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16.8
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17.3
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17.8
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18.7
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18.7
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Expenditure (commitment basis)
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27.4
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26.7
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24.3
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25.3
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24.5
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23.9
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23.3
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Overall balance (commitment basis)
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-12.1
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-11.0
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-7.5
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-8.0
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-6.7
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-5.2
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-4.6
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Primary balance (commitment basis)
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-4.8
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-3.6
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-0.5
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0.5
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1.5
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1.5
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1.5
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Non-oil primary balance (commitment basis)
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-5.7
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-5.6
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-3.1
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-1.7
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-0.5
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-0.5
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-0.5
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Public debt (gross)
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79.6
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88.1
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98.1
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92.0
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90.2
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88.4
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86.1
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Domestic debt
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36.2
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45.7
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40.6
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38.7
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38.2
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37.0
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35.6
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External debt
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43.4
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42.4
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57.5
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53.3
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52.0
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51.4
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50.5
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(annual percentage change, unless otherwise indicated)
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Money and credit
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Credit to the private sector (commercial banks)
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11.1
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31.8
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24.4
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17.0
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13.0
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15.0
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15.0
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Broad money (M2+)
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12.5
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32.9
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31.8
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20.7
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15.0
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11.0
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11.0
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Velocity (GDP/M2+, end of period)
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3.4
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3.4
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3.7
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3.8
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3.8
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3.9
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3.9
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Base money
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19.9
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57.3
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18.9
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17.4
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12.5
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10.6
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13.0
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Policy rate (in percent, end of period)
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14.5
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27.0
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…
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…
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…
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…
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…
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(US$ million, unless otherwise indicated)
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External sector
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Current account balance (percent of GDP)
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-3.2
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-2.1
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-2.8
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-2.3
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-2.4
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-3.0
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-3.0
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BOP financing gap 1
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…
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…
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4,212
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3,301
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4,264
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3,282
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1,743
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IMF
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…
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…
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1,200
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720
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720
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360
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0
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World Bank
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…
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…
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530
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420
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350
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250
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0
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Residual gap
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…
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…
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2,482
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2,161
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3,194
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2,672
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1,743
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Gross international reserves (if financing gap is closed,
program definition) 2
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5,200
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1,441
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1,733
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3,270
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5,524
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7,824
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9,833
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in months of prospective imports of goods and services
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2.4
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0.7
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0.8
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1.4
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2.2
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3.0
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3.6
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Gross international reserves (BoG definition) 3
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9,695
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6,238
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…
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…
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…
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…
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…
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|
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Memorandum items:
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Nominal GDP (millions of GHc)
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459,131
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615,259
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873,138
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1,077,423
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1,251,506
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1,413,822
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1,597,076
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National Currency per U.S. Dollar (period average)
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5.8
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8.4
|
…
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…
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…
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…
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…
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|
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National Currency per U.S. Dollar (end of period)
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6.0
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8.6
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…
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…
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…
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…
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…
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Sources: Ghanaian authorities; and Fund staff estimates and
projections.
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1 Additional financing needed to gradually bring
reserves to at least 3 months of imports by 2026.
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2 Program definition excludes oil funds,
encumbered and pledged assets.
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3 BoG definition includes oil funds, encumbered,
and pledged assets.
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