The International Monetary Fund (IMF) has completed the third review of Ghana’s $3 billion Extended Credit Facility (ECF) programme, praising progress while flagging critical risks that could threaten economic recovery. Although Ghana’s performance was described as “generally satisfactory,” vulnerabilities in key sectors remain pressing concerns.
Among the risks highlighted, the IMF warned of potential fiscal slippages due to election-related overspending as the December 2024 general elections approach. The energy sector also faces challenges, including arrears and inefficiencies at the Electricity Company of Ghana (ECG), which could worsen the fiscal shortfall projected at 2.2% of GDP this year.
Debt sustainability remains another concern. Despite strides in restructuring public debt, Ghana continues to face high risks of debt distress, necessitating urgent external debt restructuring to meet sustainability goals by 2028. The IMF also adjusted its inflation projection to 18% for the year, citing currency depreciation and agricultural setbacks.
External vulnerabilities, such as global conflicts and commodity price volatility, along with structural issues in the cocoa and energy sectors, further compound Ghana’s economic challenges.
To mitigate these risks, the IMF urged Ghana to maintain fiscal discipline, especially during the election period, while implementing key recommendations:
- Enhance tax compliance and reduce exemptions to bolster revenue.
- Maintain tight monetary policies to stabilize inflation and rebuild reserves.
- Expedite external debt restructuring to ensure fiscal sustainability.
The IMF emphasized that addressing inefficiencies in the energy and cocoa sectors is essential for long-term growth. With the elections posing a potential risk, the IMF called for strong commitments from all stakeholders to safeguard Ghana’s economic stability.