IMF Completes Third Review of Ghana's Credit Facility

• The IMF Executive Board today completed the third review of Ghana's 36-month Extended Credit Facility Arrangement. This allows for the immediate disbursement of SDR 269.1 million (about US$360 million).
• Ghana's performance under the program has been generally satisfactory, and reform efforts are paying off. Good progress has been made on debt restructuring. Growth is recovering rapidly, inflation has declined-although at a slower pace, and the fiscal and external positions have continued to improve.
• Steadfast implementation of the policy and reform agenda, including before and after the upcoming general elections, remains essential to fully restore macroeconomic stability and debt sustainability.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed today the third review of the US$3 billion, 36-month Extended Credit Facility (ECF) Arrangement, which was approved by the Board in May 2023 . Completion of the third ECF review allows for an immediate disbursement of SDR 269.1 million (about US$360 million), bringing Ghana's total disbursements under the arrangement to about US$1.9 billion.

Ghana's policy and reform efforts under the IMF-supported program have continued to deliver encouraging results. Following acute economic and financial pressures in 2022, the Fund-supported program has provided a credible anchor for the government to adjust macroeconomic policies and launch comprehensive reforms to restore macroeconomic stability and debt sustainability, while laying the foundations for higher and more inclusive growth. These efforts are paying off, with growth recovering rapidly, inflation declining, although at a slower pace, and the fiscal and external positions further improving. The medium-term outlook remains favorable but subject to downside risks, including those stemming from the elections and the challenges in the energy sector.

Ghana's performance under the IMF-supported program has been generally satisfactory. All quantitative performance criteria and indicative targets for the third review were met. Notwithstanding some delays, good progress has also been made on the key structural reforms.

The Ghanaian authorities have continued to make remarkable headways on their 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 2024, the government has completed the exchange of its Eurobonds at conditions consistent with program parameters. The authorities have also intensified engagement with their remaining external commercial creditors on a restructuring in line with program parameters and comparability of treatment.

Ghana's fiscal performance is on track to achieve a primary surplus of ½ percent of GDP on a commitment basis, despite emerging spending pressures stemming from a recent dry spell and challenges in the energy sector. Looking ahead, the authorities are committed to further advancing fiscal consolidation by attaining a primary fiscal surplus of 1½ percent of GDP in 2025 through additional domestic revenue mobilization and non-priority expenditure rationalization, while expanding social programs to cushion the vulnerable from the impact of policy adjustment. Continued fiscal consolidation and discipline are predicated on timely and continued efforts to modernize Ghana's fiscal responsibility framework, strengthen revenue administration, bolster public financial management, and improve SOEs management, including to tackle challenges in the energy and cocoa sectors.

The Bank of Ghana (BoG) has maintained a prudent monetary policy stance to sustain a continued reduction in inflation against heightened risks and has taken important steps to rebuild international reserves. The BoG has also appropriately strengthened measures to buttress financial sector stability by intensifying actions to promote timely recapitalization and steps to sustain the viability of banks. The government has started recapitalizing state-owned banks consistent with available resources.

Ambitious structural reforms to help create an environment more conducive to private sector investment, and to enhance governance and transparency remain key to boosting the economy's potential and underpinning sustainable job creation.

Going forward, staying the course of macroeconomic policy adjustment and reforms is essential to fully and durably restore macroeconomic stability and debt sustainability, while fostering a sustainable increase in economic growth and poverty reduction.

Following the Executive Board discussion on Ghana, Deputy Managing Director Bo Li issued the following statement:

"Ghana's performance under its ECF-supported reform program has been generally satisfactory. The authorities' economic strategy is delivering on its objectives, with the economy showing clear signs of stabilization. Going forward, steadfast program implementation remains essential to fully and durably restore macroeconomic stability and debt sustainability, while addressing longstanding structural vulnerabilities.

Ghana has made progress in strengthening its fiscal position. Looking ahead, staying the course of fiscal policy adjustment—including before and after the upcoming elections—and creating room to enhance social programs is paramount to put public finances on a sustainable path and reduce financing needs, while cushioning the vulnerable from the impact of fiscal adjustment. Continued efforts to enhance domestic revenue mobilization and streamline primary expenditure are key in this respect. These should be supported by continued progress in improving tax administration, strengthening expenditure control and management of arrears, implementing an enhanced fiscal responsibility framework, and improving SOEs management. Promptly and forcefully addressing the challenges in the energy sector is also critical to contain fiscal risks. Building on the recent successful Eurobond exchange, the authorities should also finalize their comprehensive debt restructuring in a timely manner.

The authorities have maintained a prudent monetary policy stance while taking decisive steps to rebuild foreign reserve buffers. Going forward, maintaining an appropriately tight monetary stance, given the upside risks to inflation, and enhancing exchange rate flexibility are of the essence.

The authorities have taken appropriate actions to ensure implementation of banks' recapitalization plans and start recapitalizing state-owned banks. Looking ahead, buttressing financial sector stability requires sustaining these efforts along with a cost-effective resolution of legacy issues as well as implementation of robust supervisory strategies to bolster credit and operational risk management."