Ghana’s Balance of Payments to shift to surplus in 2023 and 2024 despite lingering risks
Fitch Solutions has projected a positive shift in Ghana’s balance of payments, forecasting a surplus for the years 2023 and 2024.
This projection follows a significant deficit of $4.6 billion in 2022 – the first full-year capital and financial account shortfall in two decades.
This deficit was attributed to investor concerns over debt dynamics and tightening monetary conditions in developed markets.
The expected reversal in the capital and financial account for 2023 is attributed to anticipated disbursements of $600 million each from the International Monetary Fund (IMF) under the Extended Credit Facility.
Fitch Solutions predicts further strengthening of the overall balance of payments in 2024.
This positive outlook is driven by improved investor sentiment due to Ghana’s progress in external debt restructuring.
This is expected to attract capital inflows, potentially offsetting the minor projected current-account deficit for 2024.
Despite these optimistic projections, Fitch Solutions highlights the significance of lingering risks to Ghana’s external position.
Fitch cautions that any breakdown in negotiations between Ghana and external creditors could erode investor confidence and trigger capital flight, putting pressure on foreign exchange reserves and the national currency.
This scenario could lead to prolonged higher inflation, ultimately affecting economic growth and social stability.
