Ghana economy grew but IMF programme deteriorated before 2024 elections

The International Monetary Fund (IMF) says even though Ghana experienced higher than expected economic growth last year, the country’s performance under the IMF-supported programme deteriorated markedly at the end of 2024 as the country prepared for the December 7 general elections.

In a press statement the Fund issued after a staff level meeting with the government in Accra from April 2 to April 15, 2025, to discuss progress on the authorities’ policy and reform priorities in the context of the fourth review of Ghana’s three-year programme under the Extended Credit Facility, it said the Fund reached an agreement subject to Board approval for $370 million to Ghana, bringing the total IMF financial support disbursed under the arrangement, since May 2023 to about $2.3 billion.

On May 17, 2023, the IMF Executive Board approved a total of $ 3 billion credit facility for Ghana.

“Growth in 2024 was higher than expected, underpinned by strong mining and construction activity. The external sector has seen a considerable improvement, driven by solid exports—particularly gold and to a lesser extent oil—and higher remittances. As a result, international reserves accumulation has far exceeded the ECF-supported programme targets.

“Notwithstanding these achievements, overall performance under the IMF-supported programme deteriorated markedly at end-2024. Preliminary fiscal data point to slippages in the run-up to the 2024 general elections, on account of a large accumulation of payables. Inflation exceeded program targets. Several reforms and policy actions were delayed across the fiscal, financial, and energy sectors,” the IMF said.

It noted that against this backdrop, the new government sworn-in on January 7, 2025 has taken bold measures to address policy slippages and ensure the programme objectives remain within reach.

On the fiscal front, it said the government has launched an audit of the payables to firm up the size and nature of the slippages.

“Based on preliminary estimates of new payables, the primary balance posted a deficit of some 3¼ percent of GDP (compared to a targeted surplus of ½ percent of GDP). To address these slippages, the authorities have enacted a 2025 budget that targets a 1½ percent of GDP primary surplus and adopted several public financial management reforms. The latter includes an enhanced fiscal responsibility framework and new rules to tighten expenditure commitments,” it said.

According to the IMF, discussions with the Ghanaian authorities centered on possible additional measures needed to address structural weaknesses in the public financial management and procurement systems as well as steps to ensure fiscal execution remains consistent with programme objectives.

The Fund further stated that engagement with the authorities also focused on measures aimed at strengthening key social protection programmes to cushion the most vulnerable from the impact of high inflation and ongoing policy adjustment.

“The Bank of Ghana has recently increased its policy rate and is reviewing its liquidity management operations. The ensuing tightening in the monetary policy stance, together with the ongoing fiscal consolidation, is expected to bring inflation down,” it said.

The IMF indicated that its team discussed with the Ghana team on among others, the following issues: on their wide-ranging structural reform programme, with a focus on enhancing governance and transparency and strengthening State-Owned Enterprises management in the gold, cocoa, and energy sector.

“On the latter, the resumption of quarterly electricity tariff adjustments, combined with structural reforms, will help reduce the energy sector shortfall and stop the accumulation of new arrears. Financial stability is being maintained as recapitalization progresses and the authorities are committed to strengthening public banks,” it added.

The IMF said Ghana remains committed to completing its comprehensive public debt restructuring to restore sustainability, and the Memorandum of Understanding (MoU) with the country’s Official Creditors Committee (OCC) under the G20 Common Framework has been signed by all parties, and the focus is now on finalizing the bilateral agreements to implement the MoU.

“The authorities are also pursuing good-faith efforts in reaching an agreement with other commercial creditors on a debt treatment that is in line with program parameters and the comparability of treatment principles,” the IMF statement said.

In the meeting were the Finance Minister Dr Ato Forson, the Governor of the Bank of Ghana, Dr Johnson Asiama, and their teams, as well as representatives from various government agencies, and other stakeholders.

By Emmanuel K Dogbevi

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