The International Monetary Fund (IMF) recently finished its evaluation of Ghana in 2023, known as the Article IV consultation, and also conducted the first review of Ghana’s 36-month extended credit facility plan. With the approval of this initial review, Ghana is set to receive an immediate disbursement of around $600 million.
According to the IMF, Ghana has done well in following the programme. They mentioned that Ghana met all the specific goals set for the first review, and nearly all the expected targets and benchmarks were also achieved.
“The authorities’ reforms are bearing fruit, and signs of economic stabilisation are emerging. Growth in 2023 has proven resilient, inflation has declined, and the fiscal and external positions have improved. Progress is also being made on debt restructuring, with the domestic debt exchange completed over the summer and an agreement recently reached on the restructuring of official bilateral debt,” the IMF stated on Ghana’s economic reforms.
This was the first review of the $3 billion, 36-month Extended Credit Facility (ECF) Arrangement, which was approved by the board of the IMF on May 17, 2023, as well as the 2023 Article IV Consultation with Ghana.
The additional disbursement of $600 million brought Ghana’s total disbursements under the arrangement to about $1.2 billion.
As per the IMF, Ghana is making progress in reducing the fiscal primary deficit commitment by approximately four percentage points of GDP in 2023.
“Spending has remained within programme limits. To help mitigate the impact of the crisis on the most vulnerable population, the authorities have significantly expanded social protection programmes. On the revenue side, Ghana has met its non-oil revenue mobilisation target.
“The Ghanaian authorities are also making good progress on their debt restructuring strategy. Their domestic debt restructuring was completed over the summer. On January 12, 2024, the authorities reached an agreement with the Official Creditor Committee (OCC) under the G20’s Common Framework on a debt treatment that is in line with Fund programme parameters. This agreement provided the financing assurances necessary for the Executive Board review to be completed.
“Looking ahead, fully and durably restoring macroeconomic stability and debt sustainability and fostering a sustainable increase in economic growth and poverty reduction will require steadfast policy and reform implementation,” the IMF stated.
The Acting Chair of the International Monetary Fund (IMF), Bo Li, emphasised that achieving lasting stability in the economy and managing debt effectively, along with promoting broader and fairer growth, relies on consistent policy measures and reforms. Li highlighted that Ghana’s efforts to cut deficits by increasing local revenue and simplifying spending, along with completing a thorough debt restructuring, are crucial for ensuring sustainable debt levels and easing financial challenges.
“ Continued efforts to support vulnerable groups and make room for increased spending on social and development initiatives are crucial. To achieve lasting adjustments, reforms such as improving tax management, strengthening control over spending and debt, implementing better fiscal rules and institutions, and enhancing the management of state-owned enterprises (SOEs) are necessary.”
“Decisional actions have been taken by the authorities to control inflation and build up foreign reserves. Keeping a sufficiently tight monetary approach and improving exchange rate flexibility are vital for meeting the program’s goals.”
The Bank of Ghana has used its regulatory tools to minimise the impact of domestic debt restructuring on financial institutions. The authorities’ plan to maintain a healthy financial sector with new resources from the private sector, government, and international organisations. It’s essential to fully execute bank recapitalisation plans and address existing problems in the financial sector.
Reforms to create a more favourable environment for private investment are needed to boost the economy’s potential and ensure sustainable job creation. Given Ghana’s vulnerability to climate shocks, prioritising a green recovery by advancing adaptation and mitigation measures remains important,” Li stated.