IMF to revise Ghana’s growth target amid strong economic recovery

By Isaac AIDOO, Accra

The International Monetary Fund (IMF) is poised to revise Ghana’s economic growth target upwards, following a robust economic performance in the first half of 2024.

This adjustment was discussed during the third review of Ghana’s economic reform program under the Extended Credit Facility (ECF), held between an IMF team led by Mission Chief Stéphane Roudet and Ghanaian authorities in Accra.

Ghana’s economic rebound has exceeded expectations, driven by strong growth in critical sectors such as mining, construction, and information and communications technology (ICT). The IMF acknowledged that this broad-based growth, which gained momentum in the second quarter of 2024, has significantly outpaced initial projections. Despite global economic challenges, Ghana’s resilience has bolstered confidence in the country’s recovery trajectory.

Roudet praised the country’s economic management, noting that the upcoming revision of the IMF’s growth projections reflects the improved outlook. “Ghana’s recovery has been stronger than anticipated,” Roudet said, pointing to Ghana’s steady progress as a positive sign of continued economic stability.

Inflation, which had been a concern in previous years, continues to decline due to the Bank of Ghana’s tight monetary policies. However, a recent drought in the Northern regions of the country could affect agricultural productivity, potentially driving up food prices in the coming months. Despite this risk, the IMF expressed optimism that Ghana’s policy responses would mitigate any adverse effects.

On the fiscal front, Ghana is on course to achieve a primary surplus of 0.5% of GDP by the end of 2024. This fiscal progress comes despite emerging challenges, such as spending pressures from the drought and issues in the energy sector. Discussions between the IMF and the government centered on reforms aimed at enhancing revenue collection, improving expenditure management, and addressing energy sector sustainability to ensure long-term fiscal health.

The IMF also lauded Ghana’s success in restructuring its public debt, an achievement that has been crucial to the country’s economic recovery. Following the domestic debt restructuring completed in 2023 and an agreement with the Official Creditors Committee (OCC) under the G20 Common Framework, Ghana has now completed the solicitation process for restructuring its Eurobonds. This development is expected to bolster the country’s debt sustainability and financial stability moving forward.

Ghana’s Minister of Finance, Dr Mohammed Amin Adam said “we expect the IMF Executive Board to meet on Ghana’s 3rd Review in the first week of December 2024, with an immediate release of the 4th tranche of US$360 million upon successful conclusion of the review at the Board level. This will bring the total disbursement under the programme to US$1.92 billion.”

Meanwhile, Ghana’s external sector has seen significant improvements, fueled by strong gold exports and rising remittances. The country’s international reserves have surpassed program targets, while financial stability has been maintained, with banks reporting higher profitability and progressing with recapitalization efforts. The IMF’s decision to revise Ghana’s growth target underscores the positive impact of the government’s reform initiatives, which have stabilized the economy and laid the groundwork for sustained growth. Moving forward, the IMF’s focus will include reinforcing energy sector sustainability, improving revenue mobilization, and strengthening social protection programs to support vulnerable groups as Ghana continues its recovery journey.