2024 Elections: Implementation of reform agenda is essential to fully restore macroeconomic stability – IMF tells govt

The International Monetary Fund (IMF) has told the government of Ghana that continued implementation of the policy and reform agenda, especially given the upcoming general elections, remains essential to fully restore macroeconomic stability and debt sustainability.

The fund had indicated that Ghana’s programme performance has been generally satisfactory, with remarkable progress on debt restructuring.

Economic growth in the first half of 2024 exceeded expectations, inflation has continued to decline, and the fiscal and external positions have shown marked improvements.

An IMF staff team, led by Mr. Stéphane Roudet, Mission Chief for Ghana, held meetings in Accra from September 24 to October 4, 2024, to discuss progress on reforms and the authorities’ policy priorities in the context of the third review of Ghana’s three-year program under the Extended Credit Facility. The arrangement was approved by the IMF Executive Board for a total amount of SDR 2.242 billion (US$3 billion) on May 17, 2023.

At the end of the mission, Mr. Roudet issued the following statement:

“The IMF staff and Ghanaian authorities have reached a staff-level agreement on the third review of Ghana’s economic program under the Extended Credit Facility arrangement. This staff-level agreement is subject to IMF Management approval and Executive Board consideration. Upon completion of the Executive Board review, Ghana would have access to SDR 269.1 million (about US$360 million), bringing the total IMF financial support disbursed under the arrangement, since May 2023, to SDR 1,441 million (about US$1,920 million).

“Performance under the IMF-supported programme has been generally satisfactory. All end-June 2024 quantitative targets were met, and progress on key structural reforms has continued notwithstanding delays in a few areas. The authorities’ policy and reform efforts under the program have continued to deliver encouraging results.

“Economic growth in the first half of 2024 was much higher than initially envisaged, primarily fueled by mining, construction, and information and communication activity, with a broadening of the sources of growth across sectors during the second quarter. Inflation has continued to decline. The recent dry spell affecting the Northern regions is expected to adversely impact agricultural output, potentially constraining growth and adding pressure on food prices for the remainder of the year. However, the government’s policy response should help mitigate these risks. In addition, the Bank of Ghana is committed to maintaining a tight monetary policy stance to support a continued decline in inflation.

“Fiscal performance in 2024 has so far been strong, and Ghana is on track to achieve a primary surplus on a commitment basis of ½ percent of GDP, despite emerging spending pressures from the recent drought in the northern regions and difficulties in the energy sector. Discussions with authorities centered on reforms to enhance energy sector sustainability and transparency, as well as policies and reforms to strengthen revenue collections and expenditure controls in the run-up to the December elections. We also discussed efforts to strengthen key social protection programs to protect the most vulnerable from the impact of difficult economic circumstances and ongoing policy adjustment.

“Ghana has made remarkable progress on its public debt restructuring. After successfully restructuring domestic debt last year and reaching agreement on a Memorandum of Understanding with Ghana’s Official Creditors Committee (OCC) under the G20 Common Framework in June, the government has just announced the successful completion of the consent solicitation to restructure its Eurobonds, with the exchange planned to take place in the coming weeks. The authorities are committed to pursuing good-faith efforts to reach an agreement with other commercial external creditors on a debt treatment consistent with program parameters and the comparability of treatment principles.

“The external sector has seen considerable improvement in 2024, driven by strong exports—particularly gold and to a lesser extent oil—and higher remittances with international reserves accumulating beyond program targets. Financial stability has been maintained, with progress on recapitalization and increased bank profitability.”

IMF staff met with Finance Minister Adam, Bank of Ghana Governor Addison, and their teams, as well as representatives from various government agencies. The IMF team also engaged with other stakeholders.

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