Despite apparent economic gains, particularly the recent stability of the local currency, the Africa Policy Lens (APL) has warned that Ghana’s economy is operating on "borrowed breath" rather than fundamental strength.

In a statement reacting to the injection of US$367 million from the International Monetary Fund (IMF) following the fourth review of its Extended Credit Facility Programme, the APL said indicators point to an overreliance on foreign support for the economy’s survival.

The group cautioned that unless home-grown solutions are implemented, the country risks facing a major economic setback.

“Ghana’s economy today is running on borrowed breath — temporary fixes, not fundamental strength,” the APL stated.

“The IMF disbursement is like a steroid shot: it boosts reserves, props up the cedi, and provides a cosmetic uplift to market confidence. But the real muscles — domestic production, access to affordable credit, and a disciplined fiscal framework — remain weak and underdeveloped.”

“Until these foundational issues are addressed, each foreign injection only postpones the inevitable collapse.”

According to the group, Ghana doesn't need more "steroids" but rather "structural fitness" that can only be achieved through bold reforms, increased local productivity, and a growth model rooted in the country's own realities rather than being outsourced to Washington.

Below is the full statement by APL:

Fiscal impact of IMF disbursement: Real reform, not Washington remedies

Ghana’s economic recovery is leaning heavily on foreign lifelines, the latest being a US$367 million disbursement from the International Monetary Fund (IMF) following the fourth review of its Extended Credit Facility program. This injection of cash, while timely, exposes a deeper and more uncomfortable truth: the economy is surviving on external steroids, while its core growth drivers, domestic production, affordable credit, and consistent fiscal discipline, remain dangerously underdeveloped. Though the disbursement has boosted reserves and stabilized the currency, it masks the structural weakness that continues to define Ghana’s macroeconomic landscape.

The disbursement pushes Gross International Reserves from US$10.67 billion to an estimated US$11.04 billion, raising import cover marginally from 4.7 to 4.8 months. A stronger reserve position helped the cedi appreciate sharply from GHS 14.15 to 11.85 per dollar, a 16% gain within a month. But this currency bounce is externally induced, not domestically earned. The real production economy remains sluggish, with real private sector credit growth sliding into negative territory at −1.1% in April 2025. In simpler terms, businesses can’t access affordable capital, and productive sectors aren’t leading the recovery.

The fiscal impact of the disbursement is equally paradoxical. While the GHS 4.35 billion equivalent of IMF cash helped finance 22% of the cumulative fiscal deficit for early 2025, it only delays the reckoning with Ghana’s chronic overspending and revenue underperformance. Primary balance and overall deficit indicators remain negative, and government expenditure continues to outpace revenue in structural terms. Without serious revenue mobilization and expenditure control reforms, these external inflows merely plug short-term holes in a leaky ship.

On the monetary front, while Net Foreign Assets jumped to GHS 134.5 billion and liquidity conditions improved, lending to the productive private sector has stagnated. Banks remain risk-averse amid high non-performing loan levels, with NPLs hovering around 23.6%. The financial sector's liquidity may be improving, but that liquidity is not flowing into the real economy. This is a clear indication that the supposed “recovery” is not broad-based, it’s trickling down slowly, if at all.

Moreover, Ghana’s reliance on concessional debt, while preferable to commercial borrowing, still contributes to long-term debt accumulation. With total public debt standing at GHS 769.4 billion (55% of GDP), the real problem is not debt alone, but what the borrowed money is used for. With minimal capital expenditure and weak industrial growth, the debt isn’t fueling transformation, it’s merely sustaining survival.

Ghana’s economy today is running on borrowed breath, temporary fixes, not fundamental strength. The IMF disbursement is like a steroid shot: it pumps up reserves, props up the cedi, and gives a cosmetic boost to market confidence. But the real muscles, domestic production, access to affordable credit, and a disciplined fiscal framework, remain weak and undertrained. Until these foundational issues are addressed, each foreign injection only postpones the inevitable collapse. Ghana doesn’t need more steroids; it needs structural fitness. And that will only come through bold reforms, local productivity, and a home-grown growth model that is not outsourced to Washington.

Author:

Prof. Isaac Boadi

Dean, Faculty of Accounting and Finance, UPSA

Research Fellow, Africa Policy Lens