Finance Chief projects positive medium-term economic trajectory amidst fiscal reforms
Finance Minister Dr. Mohammed Amin Adam has expressed optimism about Ghana’s economic future, emphasizing significant progress and promising indicators in the medium term during the Ministry of Finance’s Monthly Economic Update on May 24, 2024.
Highlighting the economy’s resilience and the effectiveness of ongoing reforms, Dr. Amin Adam noted that all economic indicators suggest an earlier-than-expected rebound.
“We’re making remarkable progress towards the restoration of macroeconomic stability and economic recovery, however, we are not out of the woods yet. In spite of emerging fiscal pressures, we are determined to hold the line to ensure that we meet our fiscal targets for the year. We will not hesitate to adjust expenditures accordingly in the event that our revenues fall short of target,” he noted.
Despite acknowledging emerging fiscal pressures, he stressed the government’s commitment to maintaining fiscal targets and adjusting expenditures if necessary.
A major success cited by the Finance Minister was the IMF-Supported Post-COVID-19 Programme for Economic Growth (PC-PEG), which has shown positive results in restoring macroeconomic stability and debt sustainability, as evidenced by the successful 2nd Review Mission and the securing of a Staff Level Agreement (SLA) with the IMF.
“The positive results of the first and second reviews of the implementation of the IMF-supported Programme testify that we are achieving the Programme’s objective of restoring macroeconomic stability and debt sustainability,” Dr Amin Adam affirmed.
Dr. Amin Adam reported that Ghana’s GDP grew by 2.9% in 2023, surpassing the initial projection of 1.5%, and projected an average growth rate of 5% in the medium term. This growth is expected to be driven by initiatives such as industrialization, agricultural modernization, and support for SMEs.
The country’s headline inflation has significantly declined from 54.1% at the end of 2022 to 25.8% in March 2024, attributed to fiscal consolidation, tight monetary policy, exchange rate stability, and improved food production.
The Finance Minister expressed optimism that inflation would reach the target band of 8.2% by 2025.
Dr. Amin Adam also highlighted improvements in Gross International Reserves (GIR), which increased to $6.2 billion by February 2024, covering 2.7 months of import cover.
The depreciation of the cedi against the US Dollar also improved, halving from 54.2% at the end of November 2022 to 27.8% at the end of December 2023.
Despite recent pressures on the exchange rate, he remained confident in the government’s measures to stabilize the cedi, including fiscal consolidation, the gold-for-oil and gold-for-reserves programs, and foreign exchange interventions by the Bank of Ghana.
Dr. Amin Adam expressed gratitude to stakeholders for their support and reaffirmed the government’s dedication to sustaining economic stability and fostering inclusive growth, calling for continued collaboration to achieve these goals.
“The medium-term is bright, and we call on all stakeholders to continue to work with us as we strive to increase growth, reduce inflation, and improve our fiscal and debt metrics,” he posited.
