The International Monetary Fund (IMF) has disclosed that Ghana’s performance under the Fund programme has been strong, adding, all quantitative performance criteria for the first review and almost all indicative targets and structural benchmarks were met.

Following the Executive Board Concluding of the 2023 Article IV Consultation with Ghana and First Review under the Extended Credit Facility Arrangement, the Fund, said in a statement that consistent with the authorities’ commitments under the Fund-supported programme, Ghana is on track to lower the fiscal primary deficit on a commitment basis by about 4 percentage points of GDP in 2023.

“Spending has remained within program limits. To help mitigate the impact of the crisis on the most vulnerable population, the authorities [Ministry of Finance, Bank of Ghana] have significantly expanded social protection programmes. On the revenue side, Ghana has met its non-oil revenue mobilization target”, the statement pointed out.

Furthermore, it said the Ghanaian authorities are also making good progress on their debt restructuring strategy, noting, “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 program parameters. This agreement provided the financing assurances necessary for the Executive Board review to be completed”.

Again, it said the ambitious structural fiscal reforms are bolstering domestic revenues, improving spending efficiency, strengthening public financial and debt management, preserving financial sector stability, enhancing governance and transparency, and helping create an environment more conducive to private sector investment.

“The authorities’ reform efforts are bearing fruit, and signs of economic stabilization are emerging. Growth in 2023 has proven resilient, inflation has declined, and the fiscal and external positions have improved”, it added.

Looking ahead, it stressed “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”.

Debt restructuring generating positive results

At the conclusion of the Executive Board’s discussion, Bo Li, Deputy Managing Director and Acting Chair, issued the following statement saying “Ghana’s economic performance has been marked by significant volatility over the years. Most recently, severe external shocks compounded pre-existing fiscal and debt vulnerabilities, leading to acute economic and financial pressures in 2022. The authorities’ efforts to reorient macroeconomic policies, restructure debt, and initiate wide ranging reforms are already generating positive results, with growth more resilient than initially envisaged, inflation declining, the fiscal and external positions improving, and international reserves increasing”.

“Fully and durably restoring macroeconomic stability and debt sustainability and fostering higher and more inclusive growth require steadfast policy and reform implementation. The government’s plans to further reduce deficits by mobilizing additional domestic revenue and streamlining expenditure and to finalize its comprehensive debt restructuring are critical to underpin debt sustainability and ease financing constraints. Continued efforts to protect the vulnerable and to create space for higher social and development spending are also key. Reforms to improve tax administration, strengthen expenditure control and management of arrears, enhance fiscal rules and institutions, and improve SOEs management are needed to ensure lasting adjustment”, it stressed.

“The authorities took decisive steps to rein in inflation and rebuild foreign reserve buffers. Maintaining an appropriately tight monetary stance and enhancing exchange rate flexibility are key to achieving the program’s objectives”, he mentioned.

Continuing, he said “Bank of Ghana had deployed its regulatory and supervisory tools to mitigate the impact of the domestic debt restructuring on financial institutions. The authorities’ strategy aimed at maintaining a sound financial sector, drawing on new resources from the private sector, government, and multilaterals to rapidly rebuild financial buffers, is welcome. Ensuring full implementation of bank recapitalization plans and addressing legacy issues in the financial sector will be important”.

He concluded that “Reforms to create an environment more conducive to private investment are needed to enhance the economy’s potential and underpin sustainable job creation. Given Ghana’s exposure to climate shocks, promoting a green recovery by further advancing the adaptation and mitigation agendas should also remain a priority.”