Steadfast Policy Reform Implementation Vital to Durably Restoring Ghana’s Macroeconomic Stability and Debt Sustainability – IMF
The International Monetary Fund (IMF) has reiterated the need for Ghana to remain steadfast in its reform agenda ahead of the country’s general elections in December 2024. The IMF, in its ongoing engagement with the Ghanaian government, has emphasized the importance of maintaining fiscal discipline to ensure the success of the nation’s Extended Credit Facility (ECF) program, which aims to restore macroeconomic stability and secure long-term debt sustainability.
Julie Kozack, IMF’s Director of Communications during a press briefing on Thursday, September 12, 2024, provided an update on Ghana’s progress, noting that the second review of the country’s three-year ECF program was completed on June 28, 2024. As a result, Ghana has received an additional $360 million in financial support, bringing the total disbursement under the program to $1.6 billion.
Ms Kozack praised Ghana’s policy efforts, citing positive economic indicators such as stronger-than-expected growth, declining inflation, and an improvement in international reserves.
“Ghana’s authorities have shown a strong commitment to the program, and their comprehensive reform agenda is yielding positive results,” Ms Kozack stated. She highlighted that, despite challenging economic conditions, growth in 2023 outpaced initial projections, while inflation, a key challenge for Ghana, has been on a downward trajectory. These improvements have been crucial in bolstering the nation’s international reserves, offering a degree of stability to the economy ahead of the elections.
In previous election cycles, the country has faced fiscal slippage, with increased public spending often undermining long-term fiscal sustainability. The IMF urged the government to avoid a repeat of such fiscal indiscipline, particularly as it seeks to implement reforms under the $3 billion ECF program.
“It will be crucial for the government to continue to implement the program as envisaged to ensure sustainable growth and poverty reductions,” she said, reinforcing the need for strict adherence to the agreed economic policies. The IMF remains optimistic about the prospects for the country, as evidenced by the government’s commitment to reforms.
Finance Minister Dr Mohammed Amin Adam has reassured the IMF of Ghana’s intent to stay on course with the program, signaling a readiness to manage public finances prudently during this politically sensitive period.
The IMF’s backing of Ghana comes at a pivotal moment as the West African country navigates a delicate economic recovery following a series of fiscal crises. The country’s debt levels have soared, necessitating assistance from the IMF and other international partners to restructure its public finances and regain debt sustainability.
Central to Ghana’s economic recovery is its ability to manage public debt effectively. As part of the ECF program, the government has committed to reducing its debt burden and creating a more sustainable fiscal path. This includes measures such as improving tax collection, controlling public spending, and managing inflation. The IMF has warned that any deviation from this path could jeopardize the progress made so far and undermine investor confidence.
“Steadfast policy and reform implementation are vital to durably restore macroeconomic stability and debt sustainability in Ghana,” Ms Kozack reiterated, signaling the IMF’s focus on ensuring the government adheres to the reform agenda in the lead-up to the elections.
As the December polls approach, the IMF’s continued oversight and Ghana’s adherence to fiscal discipline will be critical in ensuring that short-term political considerations do not derail the longer-term objectives of economic stability and growth.
The next review of Ghana’s progress under the IMF program is expected in early 2025, at which point the international lender will assess the government’s ability to maintain its commitment to fiscal reforms during the election period.
Ghana’s ability to navigate the delicate balance between election-related spending and fiscal prudence will be a key test of its commitment to securing long-term economic stability.
