Was the IMF Program Derailed? Facts Show the 2015 Programme Was Off-Track, Not The 2023 Programme

A comparative analysis of the two most recent International Monetary Fund (IMF)-supported programmes has reignited debate over claims that the country’s current Extended Credit Facility (ECF) arrangement was derailed ahead of the 2024 general elections.

The analysis, authored by the spokesperson for the NPP Policy Committee on Finance and Economy, Issah Fuseini, argues that available IMF data show that the 2015 ECF programme experienced a far more severe performance breakdown than the ongoing 2023 programme.

According to the report, while both IMF programmes faced election-cycle spending pressures and implementation challenges, the scale and nature of the slippages recorded under the 2015 arrangement were significantly worse than those observed under the current programme.

The article comes amid growing political debate following the IMF’s latest staff-level assessment of the economy and claims by some critics that fiscal pressures ahead of the 2024 elections had pushed the current IMF programme off-track.

However, the analysis contends that the evidence does not support that conclusion when compared with Ghana’s performance under the 2015 IMF arrangement.

The report explained that the IMF-supported programmes have historically followed a familiar pattern in which governments initially commit to fiscal consolidation and economic stabilisation targets, but implementation weakens as election-related expenditure pressures intensify.

It noted, however, that the severity of the breakdown under the 2015 programme was much broader and more visible across key macroeconomic indicators.

Ghana entered the 2015 IMF programme during a period of serious economic difficulties under the Mahama administration, characterised by rising inflation, a rapidly depreciating cedi, widening fiscal deficits, high debt levels and a prolonged power crisis popularly known as “dumsor.”

At the time, the IMF-supported programme was designed to restore macroeconomic stability, rebuild investor confidence, and place the economy on a sustainable fiscal path through tighter expenditure controls, debt management reforms, and revenue mobilisation measures.

According to the report, by the IMF’s Fourth Review stage in 2017, Ghana had failed to meet most of the programme’s major quantitative performance criteria.

The analysis states that by September 2016, Ghana had missed 8 out of 14 targets under the 2015 ECF arrangement.

Among the indicators missed were the primary fiscal balance target, the net international reserves floor, and arrears-related performance criteria, which were considered critical anchors of the IMF programme.

The report further indicated that the country also failed to meet social protection spending targets under the 2015 arrangement, raising concerns about the protection of vulnerable groups during the fiscal adjustment period.

By comparison, the analysis argues that the performance under the 2023 ECF arrangement remained relatively stronger despite fiscal pressures linked to the 2024 election cycle.

According to the report, all end-December 2024 binding performance criteria under the current programme were met, although two out of eleven monitored indicators were missed.

The report acknowledged that the current programme experienced slippages, including elevated inflation and the accumulation of payables, particularly ahead of the elections.

It disclosed that inflation at the end of 2024 rose to 23.8 per cent, exceeding the IMF programme’s upper outer consultation band of 22 per cent and triggering a Monetary Policy Consultation with the IMF Executive Board.

In addition, the report noted that government accumulated GH¢45.604 billion in payables against a zero ceiling, largely due to spending commitments by ministries, departments and agencies outside the official GIFMIS expenditure control system.

Despite these challenges, the analysis insists that the current programme remained fundamentally intact because Ghana continued to meet all core binding performance criteria, including those relating to reserves, debt ceilings, and central bank financing.

One of the major distinctions highlighted in the report relates to Ghana’s external reserve position under both programmes.

According to the analysis, Ghana failed to meet the net international reserves target under the 2015 ECF programme, indicating severe pressure on the country’s external sector at the time.

However, under the 2023 arrangement, Ghana reportedly exceeded the reserve target, recording net international reserves of US$1.719 billion against an adjusted programme floor of US$886 million by the end of 2024.

The report also pointed to improvements in central bank financing discipline under the current programme.

It stated that both the 2015 and 2023 programmes maintained zero direct government financing by the Bank of Ghana.

However, the report argued that the current programme demonstrated stronger institutional compliance, with the ceiling on Bank of Ghana claims on government and public entities successfully maintained throughout the review period.

On debt management, the report noted that the 2023 programme also performed better in complying with external borrowing limits and debt ceilings established under the IMF arrangement.

It explained that debt-related criteria were not the major source of slippages under either programme, although the 2015 arrangement experienced broader fiscal and structural weaknesses.

The analysis further highlighted differences in economic growth outcomes under both IMF programmes.

According to the report, Ghana’s economy recorded growth of only 3.5 per cent at the end of 2016 under the 2015 ECF arrangement.

In contrast, the economy reportedly expanded by 5.8 per cent at the end of 2024 under the current programme despite global economic uncertainties and domestic fiscal pressures.

The report argued that the nature of fiscal slippages under the two programmes also differed significantly.

Under the 2015 programme, the country breached formal arrears ceilings and failed to prevent the accumulation of new domestic arrears, prompting commitments by the government to eliminate outstanding arrears through audits and repayment plans.

Under the 2023 programme, however, the fiscal challenge manifested mainly through the accumulation of payables rather than direct breaches of external arrears performance criteria.

According to the analysis, this reflects some level of institutional learning and improvement in expenditure management systems, even though election-year spending pressures remain a persistent challenge.

The report concluded that while both IMF programmes faced implementation difficulties during election periods, the current arrangement cannot be accurately described as “derailed” in the same manner as the 2015 programme.

Instead, it argued that the country has shown measurable institutional progress in areas such as reserve accumulation, debt management, central bank financing discipline, revenue mobilisation, and protection of social spending.

However, the report cautioned that Ghana still faces deeper structural and political economy challenges, particularly in relation to election-year expenditure control, inflation management, and delayed structural reforms.

According to the analysis, the evidence suggests that Ghana has moved from what it describes as an “overt quantitative derailment” under the 2015 programme to a more contained fiscal management challenge under the ongoing 2023 arrangement.

Issah Fuseini
Spokesperson
NPP Policy Committee on Finance & Economy