IMF lists 3 recovery policy priorities for Ghana
The International Monetary Fund in its October 2021 Regional Economic Outlook report, has listed three policy priorities for Ghana and other African countries in the Sub-Saharan Africa (SSA) region.
According to the latest report by the IMF, projected growth rate for the region this year is 3.7 percent, the slowest when compared to the more than 5 percent and 6 growth rate for advanced economies and other emerging markets and developing countries.
The region’s slow recovery from the pandemic, the IMF attributes to slow vaccine rollout and stark differences in policy space.
Of enormous concern to the IMF aside the slow vaccine rollout and stark differences in policy space contributing to the region’s slow recovery process, is the region’s debt vulnerability exacerbated by the Covid pandemic.
According to the Bretton Wood institution, half of sub-Saharan Africa’s low-income countries are either in or at high risk of debt distress and more countries may find themselves under future pressure as debt-service payments account for an increasing share of government resources.
Adding that governments within the region will have to undertake fiscal consolidation to reduce debts.
Commenting on the high debt levels of economies within the region, Abebe Aemro Selassie, Deputy Director for IMF’s African Department noted that governments must undertake urgent policy priorities such as spending prioritization, revenue mobilization and enhanced debt credibility to reduce high debts and facilitate a faster recovery process.
This, he asserted, must be done by looking at pressing development spending needs, restricting further growth of public debt and raising domestic revenue.
With regards to the country’s debt levels, Ghana’s total public debt to GDP ratio stands at 76.1 percent and is further expected to continue on an upward trajectory reaching 80 percent by the end of 2021.
Read:
Fiscal deficit as of the end of July this year (Q2 2021) was estimated at 6.1%, higher than the budgeted target of about 4.5% with total expenditure amounting to 13.9% of GDP.
The high expenditure by government can be attributed to measures to stimulate and fast-track economic recovery from the pandemic.
Ghana’s revenue mobilisation, particularly tax revenue average around 13 percent significantly below the continent’s average of 18 percent.
On the country’s fiscal deficit, Governor of the Central Bank, Dr Ernest Addison has commented on the need for the country to reset its fiscal policy with the 2022 budget to create a more credible path towards medium-term fiscal sustainability.
“The 2022 budget should be used to reset fiscal policy to create a more credible path towards medium term fiscal sustainability. This would be an important building block to establish and entrench credibility, a key component to stability,” said Dr Addison.
