Ghana’s overall balance of payments will return to surplus in 2023 and 2024.

According to Fitch Solutions, this follows a record-wide deficit of $4.6 billion in 2022.

In 2022, Ghana recorded its first full-year capital and financial account shortfall of $3.1 billion in 20 years, as a result of rising investor concerns about its debt dynamics and monetary tightening in developed markets.

However, the capital and financial account will likely turn positive again in 2023 as the country receives two International Monetary Fund disbursements of $600 million each under its Extended Credit Facility.

According to the UK-based firm, the overall balance of payments will be strengthened in 2024 due to an expected improvement in investor sentiment as Ghana makes progress regarding the restructuring of its external debt.

This will boost capital inflows and largely offset the small current-account deficit in 2024.

Balance of payment still negative but improves remarkably - BoG

The country’s Balance of Payment at the end of June 2023 showed a deficit of $107.8 million, approximately 0.1% of GDP, the July 2023 Bank of Ghana Summary of Economic and Financial Stability Report stated.

This was far lower than the deficit of $2.49 billion recorded during the same period in 2022.

Capital and Financial Account Balance stood at a deficit of $897.3 million in June 2023.

The negative Capital and Financial Account Balance was a result of a net portfolio of investments outflow.

The current account balance however stood at $849.2 million, about 1.1% of GDP in April 2023.

Risks to Ghana’s external position remain significant

Fitch Solutions, however said risks to Ghana’s external position remain significant.

It explained that “If negotiations between Ghana and its external creditors stall, investor confidence would weaken, likely triggering another round of capital flight”.

This it said would lead to greater pressure on the country’s foreign exchange reserves and the cedi, keeping inflation higher for longer – which would have negative implications for economic growth and social stability.