The International Monetary Fund (IMF) Executive Board has completed the second review of Ghana’s 36-month Extended Credit Facility (ECF) Arrangement, allowing for an immediate disbursement of US$360 million.
This brings Ghana’s total disbursements under the ECF arrangement to about US$1.6 billion.
In a statement issued last Friday, the IMF said Ghana’s performance under the programme has been generally strong, with all quantitative performance criteria for the second review and almost all indicative targets met. It said the country is making good progress on debt restructuring, and key structural reforms are advancing.
The IMF praised Ghana’s authorities for their reform efforts, noting that growth has been more resilient than expected, inflation has declined rapidly from its 2022 highs, and fiscal and external positions have significantly improved.
The Ghanaian government was commended for its comprehensive debt restructuring efforts.
On June 11, 2024, an agreement was reached with Ghana’s Official Creditor Committee under the G20’s Common Framework on a Memorandum of Understanding (MoU), formalizing a debt treatment agreement in principle from January 2024. This agreement provided the necessary financing assurances for the completion of the second review under the ECF Arrangement. Additionally, Ghana has reached an agreement in principle with representatives of Eurobond holders on a restructuring consistent with program parameters.
Ghana’s primary fiscal balance improved by over 4percent of GDP last year. Looking ahead, the authorities are committed to further advancing fiscal consolidation, aiming for primary fiscal surpluses of 0.5% of GDP this year and 1.5% of GDP in 2025. These efforts are supported by reforms to bolster revenue mobilization, streamline non-priority expenditures, and expand social protection programs to mitigate the impact of fiscal adjustments on the most vulnerable.
The Bank of Ghana (BoG) has maintained a prudent monetary policy stance to sustain rapid inflation reduction and has taken steps to rebuild international reserves. The BoG has also strengthened measures to preserve financial sector stability, including ensuring the implementation of banks’ recapitalization plans, while the Ministry of Finance has started recapitalizing state-owned banks in line with available resources.
The IMF emphasized the importance of sustaining macroeconomic policy adjustments and reforms, especially during the upcoming electoral period, to fully restore macroeconomic stability and debt sustainability while fostering sustainable economic growth and poverty reduction.
Following the Executive Board discussion on Ghana, Deputy Managing Director Kenji Okamura stated, “Ghana’s performance under its ECF-supported reform program has been generally strong. The authorities’ strategy aimed at restoring macroeconomic stability and reducing debt vulnerabilities is paying off, with clear signs of stabilization emerging. Going forward, perseverance in macroeconomic policy adjustment and reforms is essential to fully restore macroeconomic stability and debt sustainability, while fostering a sustainable increase in economic growth and poverty reduction.”
The IMF underscored the need for Ghana to mobilize domestic revenue, streamline public spending, and finalize comprehensive debt restructuring to achieve the fiscal objectives under the Fund-supported program. It also highlighted the importance of improving tax administration, expenditure control, and management of arrears, enhancing fiscal rules and institutions, and improving state-owned enterprises management.
The authorities’ actions to ensure the implementation of banks’ recapitalization plans and the recapitalization of state-owned banks were noted as crucial for financial sector stability. The IMF also stressed the importance of reforms aimed at private sector development to foster inclusive growth and poverty reduction.
The IMF’s assessment concluded that Ghana’s National Development Policy Framework should be recalibrated to reflect the socio-economic impacts of shocks following the COVID-19 pandemic to ensure the effectiveness of policy interventions.
