- What are the objectives of Ghana’s Extended Credit Facility arrangement? What are the policy priorities?
- What has been the impact of the program so far? Do we see any signs of success?
- How does the program protect the most vulnerable? Will the program results in cuts in social programs?
- How will the program promote transparency and fight corruption?
- What is the status of the debt restructuring process?
- Is the IMF concerned about the potential implications of the upcoming general elections on program implementation?
- What are the IMF's comments regarding Ghana's opposition leader's statement that he will renegotiate the program? Can the program be adjusted by a future government? If so, what parameters might be changed?
What are the objectives of Ghana’s Extended Credit Facility arrangement? What are the policy priorities?
Ghana’s economic program, supported by the ECF arrangement, has three key objectives: restoring macroeconomic stability, ensuring debt sustainability, and laying the foundations for higher and more inclusive growth.
To reach these objectives, the Ghanaian authorities have laid out a number of policy priorities:
First, large and frontloaded measures to bring public finances back on a sustainable path. This is being done through mobilizing more domestic revenue and improving the efficiency of public spending. Importantly, the program does – and will continue to – include efforts to protect the vulnerable.
Second, ambitious structural reforms are being implemented to support the fiscal adjustment and enhance resilience to shocks. They focus on tax policy, revenue administration, and public financial management. Reforms also aim at addressing weaknesses in the energy and cocoa sectors.
Third, steps are being taken to bring inflation under control – for example, with the Bank of Ghana maintaining a tight monetary policy stance and eliminating monetary financing of the budget. A flexible exchange rate policy will help rebuild international reserves.
Fourth, measures to preserve financial stability are very central to the program.
Fifth, reforms are envisaged to encourage private investment, growth, and job creation.
What has been the impact of the program so far? Do we see any signs of success?
Ghana’s performance under the program has been generally satisfactory, both in terms of meeting the quantitative objectives (for example on budgetary performance), but also in implementing structural reforms. These reforms aim to make the economy more resilient, ensure a lasting improvement in public finances, and lay the foundations for stronger and more inclusive growth.
The government has also made significant progress on its comprehensive debt restructuring, including most recently with the completion of the Eurobond exchange.
These efforts are paying off, with signs of stabilization. For example, economic growth is recovering faster than expected, inflation is declining rapidly from its 2022 highs, the fiscal and external positions are showing a marked turnaround, and the Bank of Ghana's international reserves are increasing.
How does the program protect the most vulnerable? Will the program results in cuts in social programs?
Protecting the vulnerable is a core objective of Ghana’s economic program and spending on key social programs is protected and monitored through an indicative target.
In 2023, benefits under the existing targeted cash transfer program, the Living Empowerment Against Poverty, were doubled. These benefits are being doubled again in 2024, which will significantly reduce poverty and inequality.
In addition, the budgetary allocation of the Ghana School Feeding Program has been increased to compensate for the cost of inflation and make sure poor children continue to benefit from free meals at school.
In the health sector, the financial resources for the National Health Insurance Scheme are being increased and disbursed in a timely manner to cover medical claims, essential medicines, and vaccines for the most vulnerable.
How will the program promote transparency and fight corruption?
The Ghanaian authorities are committed to strengthening governance, improving transparency, and reducing the risks of corruption under the Fund-supported program. For example, the authorities have requested IMF technical assistance to conduct an in-depth Governance and Corruption Diagnostic Assessment. This exercise is ongoing. It will be used as input into the ongoing efforts to update the National Anticorruption Action Plan. One specific area where the authorities have committed to strengthen the existing framework is the asset declaration system for public officials. They endeavored to strengthen it by enacting a new Conduct of Public Officers Act. Furthermore, the Ghana Revenue Authority, with support from IMF technical assistance, is developing a plan with the aim to improve the professional standards of tax administration in Ghana.What is the status of the debt restructuring process?
Ghana has continued to make remarkable progress in its debt restructuring. The recent completion of the Eurobond exchange marked another significant milestone in the government’s efforts to restore debt sustainability.
The authorities are now pursuing good-faith efforts to reach an agreement with other external commercial creditors on a debt treatment consistent with program parameters and the comparability of treatment principles.
Is the IMF concerned about the potential implications of the upcoming general elections on program implementation?
Steadfast policy and reform implementation is vital to fully and durably restore macroeconomic stability and debt sustainability in Ghana.
The authorities have so far demonstrated a strong commitment to the program objectives, and we welcome Finance Minister Adam’s signaling of the government’s continued commitment to the policies under the program.
Going forward, it will be crucial for the government to continue implementing the program as envisaged to ensure sustainable growth and poverty reduction.
What are the IMF's comments regarding Ghana's opposition leader's statement that he will renegotiate the program? Can the program be adjusted by a future government? If so, what parameters might be changed?
The IMF’s primary focus is to support Ghana in restoring macroeconomic stability, ensuring debt sustainability, and fostering long lasting and inclusive growth. These are indeed the main objectives of the current IMF-supported program.
Ghana's performance under the current program has been generally satisfactory, with remarkable progress on debt restructuring. Safeguarding the ongoing implementation of the policy and reform agenda is crucial to fully restore macroeconomic stability and achieve debt sustainability.
As for the possibility of adjusting the program, IMF-supported programs are developed with a country's authorities and reviewed periodically. Governments may discuss changes with the IMF while ensuring that the economic objectives of the reform programs are still achievable.