IMF Urges Bank of Ghana to Tighten Monetary Policy Amid Inflation Risks
The International Monetary Fund (IMF) has called on the Bank of Ghana (BoG) to maintain a firm monetary policy stance to address upside risks to inflation and safeguard the stability of Ghana’s economy.
In its country assessment following the third review of the Economic Credit Facility (ECF) programme, the IMF emphasized the need for robust liquidity absorption operations to ensure inflation expectations remain anchored, even as inflation gradually reverts to the BoG’s target band.
Strengthening Central Bank Independence
The Fund highlighted the importance of adhering to its safeguard assessment recommendations, noting that continued progress would enhance the BoG’s independence and operational efficiency.
Rebuilding Reserves: A Key Priority
Rebuilding international reserves and reforming the foreign exchange (FX) intervention framework remain central to the programme’s objectives.
While the IMF welcomed the overperformance in reserve accumulation—largely attributed to the gold-for-reserves programme—it urged careful management of associated risks and liquidity implications.
The IMF commended the BoG for adopting a more robust FX reference rate computation method to limit multiple currency practices (MCPs).
Additionally, the implementation of a formal internal FX intervention policy and the shift to transparent auction-based FX mechanisms were cited as critical steps to enhance the functioning of the FX market.
Strengthening the Financial Sector
The IMF also underscored the urgency of strengthening Ghana’s financial sector. It praised the BoG for intensified monitoring and measures to ensure timely bank recapitalization and viability.
However, the Fund called for progress in phasing out regulatory forbearance and addressing high non-performing loans (NPLs).
“Implementing robust supervisory strategies to bolster credit and operational risk management will be crucial for sustaining financial sector stability,” the Fund added.
The IMF’s recommendations come as Ghana navigates its economic recovery under the ECF programme, with a focus on inflation control, reserve rebuilding, and financial sector resilience.
