## Ghana: Transforming a Crisis into a Journey Toward Prosperity

_IMF News, January 29, 2024_

## Source details

**Canonical URL:** [Ghana: Transforming a Crisis into a Journey Toward Prosperity](https://www.imf.org/en/news/articles/2024/01/29/cf-ghana-transforming-a-crisis-into-a-journey-toward-prosperity)

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## Bibliographic details
- Authors: Leandro Medina January
- Published: January 29, 2024

---

### Crisis background and triggers
- Ghana requested an IMF-supported program in July 2022 amid an economic and financial crisis.
- Preexisting vulnerabilities and external shocks included the COVID-19 pandemic, Russia’s war in Ukraine, and global monetary policy tightening.
- Consequences included:
  - Loss of international market access.
  - Increased pressures on domestic financing and monetary financing by the central bank.
  - Declining international reserves, currency depreciation, and accelerating inflation.

### Program approval and objectives
- IMF Board approved the program in May 2023.
- Program aims:
  - Restore macroeconomic stability.
  - Secure debt sustainability.
  - Lay foundations for higher and more inclusive growth.

### Policy and reform commitment under the program
- Fiscal measures:
  - Budgets for 2023 and 2024 emphasize fiscal consolidation and sound public finances.
  - Fiscal efforts are central to ensuring long-term debt sustainability.
- Structural reforms:
  - Enhance domestic resource mobilization.
  - Strengthen public financial management.
  - Create a business environment that better fosters private sector development.
- Monetary and financial sector policies:
  - Bank of Ghana increased interest rates and eliminated monetary financing of the budget.
  - Inflation declined to 23 percent in December 2023 from a record high of 54 percent in December 2022.
  - Bank of Ghana aims to maintain policies to bring inflation down to levels consistent with their inflation targeting framework.
  - Authorities designed a plan to ensure financial sector stability.
- Debt operations:
  - Government launched a comprehensive debt restructuring operation in December 2022 that includes:
    - A concluded domestic debt voluntary exchange.
    - Two external debt operations: one with official bilateral creditors and the other with commercial creditors.
  - Under the G20’s Common Framework, authorities reached agreement in principle with official creditors on a debt treatment consistent with program parameters.
  - Authorities are engaging external commercial creditors to seek their support.

### Early signs of stabilization and performance
- Performance under the program described as compelling, with the economy “turning the corner.”
- Growth in 2023 showed resilience despite a difficult global environment.
- Key macro developments:
  - Inflation declined from 54 percent in December 2022 to 23 percent in December 2023.
  - Currency recovered from a sharp depreciation of 45 percent vis-à-vis the US dollar at end-2022 and has been less volatile.
  - International reserves increasing.
- Success factors cited:
  - Aligning the budget with the program.
  - Meeting program targets, especially net international reserve accumulation and primary fiscal balance.
  - Carrying out key structural reforms in the financial and energy sectors.

### Social dimension and protection of the vulnerable
- Authorities focused on expanding effective social protection programs while implementing reforms.
- Social policy measures and outcomes:
  - Targeted cash transfer program (Living Empowerment Against Poverty):
    - Benefits doubled in 2023.
    - Benefits expected to be doubled again in 2024.
    - Benefit coverage increasing from about 6 percent to 12 percent (of household pre-transfer consumption).
    - Expected to significantly reduce poverty and inequality.
  - Education:
    - Allocations to the Ghana School Feeding Program and the Capitation Grant received a boost.
  - Health:
    - Allocation to the National Health Insurance Authority expanded by over 40 percent to cover medical claims, essential medicines, and vaccines for the most vulnerable.
- These interventions are regularly monitored under the IMF-supported program.

### Path forward and risks
- Key priorities:
  - Lock in gains and continue steadfast implementation of the program.
  - Complete fiscal consolidation and debt restructuring operations to put public debt on a sustainable trajectory.
  - Continue reforms to foster recovery and bring economic growth back to long-term potential.
  - Continue policies to drive inflation lower toward the inflation targeting framework.
- Risks and challenges:
  - Potential external shocks.
  - Political environment in the run-up to the 2024 Presidential and parliamentary elections.
- Outlook conditional on sustained implementation:
  - If authorities continue to implement the package of policies and reforms with current commitment, sustained implementation of the program promises to bring a brighter future to all Ghanaians.

*By Leandro Medina, January 29, 2024 — IMF News*

---


## References

- [GHANA AND THE IMF](https://www.imf.org/en/Countries/GHA)
- [REGIONAL ECONOMIC OUTLOOK](https://www.imf.org/en/Publications/REO/SSA/Issues/2023/10/16/regional-economic-outlook-for-sub-saharan-africa-october-2023)
- [EASING DEBT PRESSURES IN LOW-INCOME COUNTRIES](https://www.imf.org/en/Blogs/Articles/2024/01/24/how-to-ease-rising-external-debt-service-pressures-in-low-income-countries)
- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [approved by the IMF Board](https://www.imf.org/en/News/Articles/2023/05/17/pr23151-ghana-imf-executive-board-approves-extended-credit-facility-arrangement-for-ghana)
- [reached agreement in principle with their official creditors](https://www.imf.org/en/News/Articles/2024/01/12/pr2408-ghana-imf-md-kristalina-georgieva-debt-treatment-agreement-official-creditors-g20-com-frmwrk)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2024/01/29/cf-ghana-transforming-a-crisis-into-a-journey-toward-prosperity_