The International Monetary Fund has stated that Ghana’s reform strategy has started bearing fruit, and signs of economic stabilization are emerging.

Nonetheless, significant challenges remain, highlighting the importance of steadfast policy and reform implementation.

In its 2023 Article IV Consultation on Ghana, the Fund said since the approval of the Economic Credit Facility (ECF) arrangement in May 2023, the authorities have been working closely with the IMF staff on policy design and implementation and have kept the programme on track.

“The domestic part of the debt restructuring was completed over the summer, and the authorities are engaging closely with their external official bilateral and commercial creditors on a debt treatment consistent with program parameters. Growth in 2023 has proven more resilient than initially envisaged, inflation has declined, the fiscal and external positions have improved, international reserves have started recovering, and exchange rate volatility has eased significantly”.

Notwithstanding that, the IMF said the progress so far has a long way to go, adding “inflation remains high, continued fiscal consolidation hinges on further significant domestic resource mobilisation efforts and the government’s ability to control spending, and international reserves are still well below adequate levels.”

“Importantly, fully and durably restoring macroeconomic stability and debt sustainability and promoting a sustainable increase in economic growth and poverty reduction require successful completion of the debt restructuring and deep reforms to strengthen policy frameworks, tackle weaknesses in the energy and cocoa sectors, and promote an environment more conducive to private sector investment”, it added.

Growth more resilient than anticipated

The Fund also said growth in the first half of 2024 has been more resilient than anticipated.

It stressed that real Gross Domestic Product (GDP) growth averaged 3.2% in the first two quarters, around the same level as the annual average growth in 2022, and significantly higher than the 1.5% forecast at the time of programme approval.

This, it added, reflected a strong momentum in services (6.3%) and agriculture (6.2%)—two sectors that were less affected than expected by the fiscal consolidation.

Inflation declines significantly

The report also disclosed that inflation has declined significantly since the beginning of the year. “Notwithstanding upward pressures on food prices, inflation decreased from a peak of 54% in December 2022 to about 26% in November 2023. Following an uptick in food price inflation over the summer, it dropped to about 32% in November on the back of a good start in the agricultural season. The decrease in non-food inflation has been more pronounced, reflecting the impact of the monetary policy tightening”, it stated.