IMF forecasts revenue underperformance for 2024
The International Monetary Fund (IMF) anticipates a fiscal performance shortfall for Ghana in 2024, with revenue and expenditure both deviating marginally from the government’s targets.
According to the IMF, it expects revenue to underperform the Ghana Government target by 0.1% of Gross Domestic Product in 2024, while expenditure overshoots the target by a similar margin.
The Fund further projects a budget deficit of 5.0%, slightly surpassing the government’s goal of 4.8%, a trend that appears aligned with the fiscal dynamics typical of an election year in Ghana.
According to IC Research, the IMF has adopted a mildly conservative stance, factoring in a 0.2% Gross Domestic Product (GDP) slippage into its 2024 deficit forecast of 5.0%, as compared to the government’s targeted 4.8%.
IC Research highlights the IMF’s acknowledgment of an improved external position that is expected to mitigate foreign exchange fluctuations. However, it emphasizes that external debt restructuring remains a crucial element for Ghana’s fiscal stability.
In a positive development, IC Research notes a marginally improved outlook on Ghana’s Balance of Payment (BOP) gap in the updated external sector framework. Despite maintaining assumptions on external interest payments pre-restructuring, the IMF’s initial forecast of a cumulative BOP financing gap of $15.1 billion from 2023 to 2026 has seen a $300 million reduction to $14.8 billion in the updated framework.
This reduction is attributed to ongoing fiscal adjustments aimed at addressing macroeconomic imbalances, pending external debt operations.
As Ghana navigates the intricate landscape of fiscal challenges, the role of external debt restructuring looms large, and the IMF’s projections underscore the delicate balance the country must strike in achieving economic stability.
