February 10, 2025

IMF Concludes 3rd Review of Ghana’s $3bn ECF Program, Applauds Economic Stabilization Progress

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IMF

The International Monetary Fund (IMF) Executive Board has completed its third review of Ghana’s $3 billion, 36-month Extended Credit Facility (ECF) program, which was approved in May 2023. Following this review, the IMF has authorized an immediate disbursement of Special Drawing Rights (SDR) 269.1 million, approximately $360 million, bringing the total disbursements under the program to around $1.9 billion.

The IMF has praised Ghana’s economic reforms and policy adjustments under the program, noting that they have yielded positive results. IMF Deputy Managing Director, Bo Li, highlighted that the country’s economic strategy is “delivering on its objectives” with key indicators such as growth and fiscal performance showing signs of improvement. “The economy is showing clear signs of stabilisation,” Li said, underscoring the progress that Ghana has made so far.

The ECF program has served as a framework for macroeconomic policy adjustments and significant reforms aimed at restoring stability, ensuring debt sustainability, and promoting inclusive growth. Several key achievements under the program have been recognized, including:

  1. Macroeconomic Recovery: Despite facing several challenges, Ghana has witnessed a rapid recovery in economic growth, a decrease in inflation (though slower than expected), and improvements in both its fiscal and external positions. These achievements are seen as vital steps toward stabilizing the economy after years of fiscal strain.
  2. Public Debt Restructuring: Ghana successfully restructured its domestic debt and Eurobonds in line with the program’s guidelines. This restructuring has been a critical element in managing the country’s debt burden, and negotiations with external creditors for further restructuring are ongoing.
  3. Fiscal Discipline: The government of Ghana achieved a primary surplus of 0.5% of GDP, and it is aiming for a 1.5% surplus by 2025. These fiscal goals are to be achieved through increased domestic revenue mobilization, reducing non-priority expenditures, and expanding social support programs aimed at assisting vulnerable populations. These measures are part of the government’s broader strategy to ensure fiscal sustainability.
  4. Monetary and Financial Sector Stability: The Bank of Ghana’s careful monetary policy has contributed to reducing inflation and rebuilding the country’s international reserves. In addition, measures have been put in place to stabilize the financial sector, including efforts to recapitalize and strengthen both state-owned and private banks. This is expected to contribute to overall economic stability in the long run.

While the achievements thus far have been notable, Bo Li emphasized that it is essential for Ghana to maintain its reform efforts to address structural weaknesses in key sectors such as energy and cocoa. Strengthening the fiscal framework is also critical to ensuring that Ghana’s economic recovery is sustainable. Li stressed that staying on course with fiscal policy adjustments, particularly before and after the upcoming elections, will be crucial to securing the success of the reforms and to building resilience in the economy.

Looking ahead, the IMF has called on Ghana to focus on several key areas to continue its economic recovery:

  1. Strengthening Tax Administration and Expenditure Control: Improving tax collection and controlling expenditures are critical to ensuring fiscal stability. The IMF encourages Ghana to continue efforts to improve its tax administration and curb unnecessary spending to maintain fiscal discipline.
  2. Modernizing Fiscal Responsibility Frameworks: The IMF urges Ghana to modernize its fiscal responsibility frameworks, which will enhance the country’s ability to manage public finances more effectively and efficiently in the long term.
  3. Addressing Energy Sector Challenges: Ghana must also tackle issues in the energy sector, as these pose significant fiscal risks. Addressing these challenges is vital for ensuring long-term economic stability and reducing the strain on the country’s finances.
  4. Enhancing Governance and Transparency: Strengthening governance and transparency will be crucial for attracting private sector investment, which can help create jobs and foster sustainable economic growth. The IMF has emphasized the need for better governance practices to enhance investor confidence in Ghana’s economy.

The IMF reiterated its commitment to supporting Ghana’s path toward sustainable growth and long-term economic stability. It emphasized that steadfast implementation of the country’s reform program is essential for achieving macroeconomic stability and poverty reduction. Ghana’s continued success will depend on the government’s ability to maintain momentum in reform implementation and work toward building a more resilient and sustainable economy for the future.

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