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The International Monetary Fund (IMF) recently held discussions with Ghana regarding the progress made in its economic and fiscal reforms, which were initiated as part of the loan support provided by the IMF in response to the economic challenges faced by Accra.
During the meetings that took place in Accra from September 25 to October 6, 2023, the IMF staff team, led by Mr. Stéphane Roudet, assessed the advancement of reforms and the policy priorities set by the authorities. These discussions were conducted in the context of the first review of Ghana’s three-year program under the Extended Credit Facility.
The IMF Executive Board had previously approved this arrangement for a total of SDR 2.242 billion (equivalent to US$ 3 billion) on May 17, 2023. Additionally, the IMF team conducted the 2023 Article IV consultation.
Mr. Roudet, at the conclusion of the mission, stated, “I’m very pleased to announce that the IMF staff and Ghanaian authorities have reached a staff-level agreement on the first review of Ghana’s economic program under the Extended Credit Facility arrangement.”
However, it is important to note that this staff-level agreement remains subject to approval by IMF Management and consideration by the Executive Board once the necessary financing assurances are secured. The attainment of an agreement with official creditors on debt treatment in line with program parameters is crucial to providing the required financing assurances.
Upon the completion of the Executive Board review, Ghana will gain access to SDR 451.4 million (approximately US$ 600 million), resulting in a total disbursement of SDR 902.8 million (approximately US$ 1,200 million) under the IMF financial support arrangement since May 2023.
Facing a severe economic and financial crisis, Ghana’s authorities have taken necessary steps, including the adjustment of macroeconomic policies, successful completion of domestic debt restructuring, and the initiation of comprehensive reforms. These measures have already yielded positive outcomes, with stronger economic growth, reduced inflation, improved fiscal and external positions, and exchange rate stability being notable results.
Ghana has adhered to the commitments outlined in the Fund-supported program, achieving robust fiscal performance and working towards reducing the fiscal primary deficit by approximately 4 percentage points of GDP in 2023. Government spending has remained within program limits, and significant expansions have been made in social protection programs to mitigate the crisis’s impact on vulnerable populations.
On the revenue front, Ghana has met its non-oil revenue mobilization target, thanks to ambitious structural fiscal reforms aimed at enhancing domestic revenues, optimizing spending efficiency, strengthening public financial and debt management, and enhancing transparency.
Given Ghana’s commendable performance under the Fund-supported program, the critical next step is securing an agreement with official creditors regarding debt treatment terms consistent with the IMF Executive Board-approved program parameters and debt targets.
The IMF staff urged official creditors to proceed with the agreement process, aligning the terms with the financing assurances provided in May 2023.
Throughout their visit, the IMF staff held meetings with Vice President Bawumia, Finance Minister Ofori-Atta, Bank of Ghana Governor Addison, and their respective teams. They also engaged with representatives from various government agencies and other stakeholders. The IMF staff expressed their appreciation for the Ghanaian authorities’ ongoing open and constructive engagement.
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