June 28, 2024
PRESS OFFICER: Kwabena Akuamoah-Boateng
Phone: +1 202 623-7100Email: MEDIA@IMF.org
Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed today the second review of Ghana’s US$3 billion, 36-month Extended Credit Facility (ECF) Arrangement, which was approved by the Board in May 2023. Completion of the second ECF review allows for an immediate disbursement of SDR 269.1 million (about US$360 million), bringing Ghana’s total disbursements under the arrangement to about US$1.6 billion.
Ghana's economic reform program is delivering on its objectives. Following acute economic and financial pressures in 2022, the Fund-supported program has provided a credible anchor for the government to adjust macroeconomic policies and implement reforms to restore macroeconomic stability and debt sustainability, while laying the foundations for higher and more inclusive growth. These efforts are paying off, with growth proving more resilient than initially expected, inflation declining at a faster pace, and the fiscal and external positions improving. The medium-term outlook remains favorable but subject to downside risks—including those related to the upcoming general elections.
Ghana’s performance under the IMF-supported program has been generally strong. All quantitative performance criteria for the second review and almost all indicative targets were met. Good progress has also been made on the key structural reform milestones, despite some delays.
The Ghanaian authorities have also continued to make progress on their comprehensive debt restructuring. On June 11, 2024, the authorities reached agreement with Ghana’s Official Creditor Committee (OCC) under the G20’s Common Framework on a Memorandum of Understanding (MoU) formalizing the agreement in principle on a debt treatment, which was reached in January 2024. This agreement on a debt treatment, consistent with program parameters, provided the financing assurances necessary for the second review under the ECF Arrangement to be completed. The authorities have also recently reached agreement in principle with representatives of Eurobond holders on a restructuring consistent with program parameters, subject to confirmation on comparability of treatment by the OCC.
Ghana’s primary fiscal balance improved by over 4 percent of GDP last year. Looking ahead, the authorities are committed to further advancing fiscal consolidation, including by achieving primary fiscal surpluses of ½ percent of GDP this year and 1½ percent of GDP in 2025. These efforts are underpinned by reforms to bolster revenue mobilization and streamline non-priority expenditures, while expanding social protection programs to mitigate the impact of fiscal adjustment on the most vulnerable. The authorities are also taking steps to strengthen tax administration, expenditure controls and management of arrears, fiscal rules and institutions, and SOEs management—including in the energy and cocoa sectors.
The Bank of Ghana (BoG) has maintained a prudent monetary policy stance to sustain a rapid reduction in inflation and has taken steps to rebuild international reserves. The BoG has also appropriately strengthened measures to preserve financial sector stability—including by ensuring implementation of banks’ recapitalization plans—while the Ministry of Finance has started recapitalizing state-owned banks consistent with available resources.
Ambitious structural reforms to help create an environment more conducive to private sector investment, and to enhance governance and transparency are gaining prominence and will be key to boosting the economy’s potential and underpin sustainable job creation.
Looking ahead, sustaining macroeconomic policy adjustment and reforms is essential to fully and durably restore macroeconomic stability and debt sustainability—especially during the upcoming electoral period—while fostering a sustainable increase in economic growth and poverty reduction.
Following the Executive Board discussion on Ghana, Deputy Managing Director Kenji Okamura issued the following statement:[1]:
"Ghana’s performance under its ECF-supported reform program has been generally strong. The authorities’ strategy aimed at restoring macroeconomic stability and reducing debt vulnerabilities is paying off, with clear signs of stabilization emerging. Going forward, perseverance in macroeconomic policy adjustment and reforms is essential to fully restore macroeconomic stability and debt sustainability, while fostering a sustainable increase in economic growth and poverty reduction.
Ghana has made progress adjusting its fiscal position. Looking ahead, attaining the fiscal objectives under the Fund-supported program requires further mobilizing domestic revenue, streamlining public spending—including related to externally-funded expenditures, and finalizing Ghana’s comprehensive debt restructuring. The authorities’ strong debt restructuring efforts are paying off with the reaching of agreement on a Memorandum of Understanding with the Official Creditor Committee and an Agreement in Principle with bondholders. Resolve in keeping the domestic revenue mobilization agenda on track and tightening expenditure commitment controls is critical to avoid policy slippages ahead of the December 2024 general elections. These efforts should be supported by continued progress in improving tax administration, strengthening expenditure control and management of arrears, enhancing fiscal rules and institutions, and improving SOEs management. Bolstering targeted social protection programs is needed to cushion the vulnerable from the impact of fiscal adjustment.
The authorities took decisive steps to contain inflation and rebuild foreign reserve buffers. Going forward, maintaining an appropriately tight monetary stance, and enhancing exchange rate flexibility are of the essence, along with timely implementation of Fund’s advice on safeguards.
The authorities have taken appropriate actions to ensure implementation of banks’ recapitalization plans and start recapitalizing state-owned banks. Sustaining these efforts, together with a cost-effective resolution of legacy issues, are essential to ringfence financial sector stability going forward.
Greater focus on reforms aimed at private sector development is needed to foster inclusive growth and poverty reduction. In this regard, a key step is to ensure that the policy interventions underpinning Ghana’s National Development Policy Framework are recalibrated to reflect the socio-economic impact of the shocks that occurred after the COVID-19 pandemic."
Ghana: Selected Economic and Financial Indicators, 2022–29
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|
2022 |
2023 |
2024 |
2025 |
2026 |
2027 |
2028 |
2029 |
|
|
Actual |
Prel. |
Proj. |
Proj. |
Proj. |
Proj. |
Proj. |
Proj. |
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|
|
|
|
|
|
|
|
|
(annual percentage change, unless otherwise indicated) |
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|
National accounts and prices |
|
|
|
|
|
|
|
|
|
GDP at constant prices |
3.8 |
2.9 |
3.1 |
4.4 |
4.9 |
5.0 |
5.0 |
5.0 |
|
Non-extractive GDP |
3.1 |
3.0 |
3.0 |
4.4 |
5.0 |
5.0 |
5.0 |
5.0 |
|
Extractive GDP |
8.9 |
2.5 |
3.9 |
3.8 |
4.3 |
4.4 |
4.7 |
5.0 |
|
Real GDP per capita |
1.6 |
0.4 |
0.6 |
1.8 |
2.3 |
2.4 |
2.4 |
2.4 |
|
GDP deflator |
28.2 |
33.1 |
17.5 |
11.1 |
7.9 |
7.9 |
7.6 |
7.5 |
|
Consumer price index (end of period) |
54.1 |
23.2 |
15.0 |
8.0 |
8.0 |
8.0 |
8.0 |
8.0 |
|
Consumer price index (annual average) |
31.9 |
39.2 |
19.5 |
11.5 |
8.0 |
8.0 |
8.0 |
8.0 |
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|
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|
|
|
|
|
|
|
|
(percent of GDP, unless otherwise indicated) |
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|
Central government budget |
|
|
|
|
|
|
|
|
|
Revenue |
15.7 |
16.0 |
16.9 |
17.4 |
18.0 |
18.0 |
18.0 |
18.0 |
|
Expenditure (commitment basis) 1 |
27.5 |
19.6 |
21.6 |
21.1 |
21.1 |
20.8 |
20.8 |
21.1 |
|
Overall balance (commitment basis) 1 |
-11.8 |
-3.6 |
-4.7 |
-3.7 |
-3.1 |
-2.8 |
-2.8 |
-3.1 |
|
Primary balance (commitment basis) |
-4.3 |
-0.3 |
0.5 |
1.5 |
1.5 |
1.5 |
1.5 |
1.3 |
|
Non-oil primary balance (commitment basis) |
-6.3 |
-1.8 |
-1.0 |
0.1 |
0.2 |
0.3 |
0.2 |
-0.1 |
|
Public debt (gross) |
92.7 |
82.9 |
82.5 |
79.5 |
76.1 |
72.5 |
69.3 |
66.9 |
|
Domestic debt |
49.7 |
38.6 |
34.2 |
31.0 |
29.7 |
27.4 |
25.6 |
25.5 |
|
External debt |
43.0 |
44.3 |
48.3 |
48.5 |
46.4 |
45.1 |
43.7 |
41.5 |
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|
|
|
|
|
|
|
|
|
|
(annual percentage change, unless otherwise indicated) |
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Money and credit |
|
|
|
|
|
|
|
|
|
Credit to the private sector (commercial banks) |
31.8 |
10.7 |
22.0 |
13.0 |
14.9 |
15.0 |
15.0 |
15.0 |
|
Broad money (M2+) |
32.9 |
38.7 |
17.4 |
16.9 |
16.0 |
16.0 |
16.0 |
16.0 |
|
Velocity (GDP/M2+, end of period) |
3.4 |
3.4 |
3.5 |
3.4 |
3.4 |
3.3 |
3.2 |
3.1 |
|
Base money |
57.3 |
29.2 |
7.5 |
12.0 |
13.6 |
11.5 |
13.8 |
13.8 |
|
Policy rate (in percent, end of period) |
27.0 |
30.0 |
... |
... |
... |
... |
... |
... |
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|
|
|
|
|
|
|
|
|
|
|
(US$ million, unless otherwise indicated) |
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External sector |
|
|
|
|
|
|
|
|
|
Current account balance (percent of GDP) |
-2.3 |
-1.4 |
-2.5 |
-2.0 |
-2.0 |
-2.2 |
-2.2 |
-2.1 |
|
BOP financing gap 2 |
... |
3,364 |
3,098 |
3,647 |
1,769 |
1,565 |
1,116 |
318 |
|
IMF |
... |
600 |
1,320 |
720 |
360 |
0 |
0 |
0 |
|
World Bank |
... |
27 |
679 |
428 |
374 |
0 |
0 |
0 |
|
AfDB |
... |
60 |
44 |
0 |
0 |
0 |
0 |
0 |
|
Arrears to commercial external creditors |
... |
1,841 |
0 |
0 |
0 |
0 |
0 |
0 |
|
Arrears to official bilateral creditors |
... |
836 |
0 |
0 |
0 |
0 |
0 |
0 |
|
Exceptional financing to cover residual financing gap3 |
... |
0 |
1,055 |
2,499 |
1,035 |
1,565 |
1,116 |
318 |
|
Gross international reserves (program) 4 |
1,454 |
3,661 |
5,116 |
6,851 |
7,604 |
9,165 |
10,911 |
12,043 |
|
in months of prospective imports |
0.7 |
1.7 |
2.2 |
2.8 |
3.0 |
3.5 |
4.0 |
4.2 |
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|
|
|
|
|
|
|
|
|
Memorandum items: |
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|
|
|
|
|
|
|
|
Nominal GDP (millions of GHc) |
614,336 |
841,633 |
1,020,180 |
1,183,394 |
1,339,842 |
1,518,046 |
1,715,739 |
1,937,351 |
|
Population Growth Rate (percentage) |
2.2 |
2.6 |
2.6 |
2.6 |
2.6 |
2.6 |
2.6 |
2.6 |
|
Sources: Ghanaian authorities; and Fund staff estimates and projections. |
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1 First review interest expenditure projections corresponded to a post domestic debt restructuring but pre-external debt restructuring scenario. Updated projections correspond to a post-domestic and post-external bilateral debt restructuring but pre-external commercial debt restructuring scenario. |
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2 Additional financing needed to gradually bring reserves to at least 3 months of imports by 2026. |
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3 For the first review, to be covered by external debt restructuring; for updated projections, to be covered by the external commercial debt restructuring. |
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4 Excludes oil funds, encumbered assets, and pledged assets. |
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[1] At the conclusion of the discussion, the Deputy Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summing up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.
