Gov’t tightens belt after IMF flags fiscal lapses

Ghana’s push to stabilize its economy and regain investor confidence has taken a new turn, following a staff-level agreement with the International Monetary Fund (IMF) that paves the way for a US$370 million disbursement under its 36-month Extended Credit Facility (ECF) program.

The announcement came after an IMF mission, led by Stéphane Roudet, concluded its fourth review discussions with Ghanaian authorities in Accra on April 15, 2025.

While the mission acknowledged progress in key areas, it raised red flags over deteriorated program performance in late 2024.

According to the IMF, “Overall performance under the IMF-supported program deteriorated markedly at end-2024.”

“Several reforms and policy actions were delayed across the fiscal, financial, and energy sectors. Inflation exceeded program targets,” it added.

The deterioration was primarily attributed to fiscal slippages ahead of the 2024 general elections, which resulted in a significant accumulation of arrears and a primary deficit of 3.25 percent of GDP, instead of the targeted 0.5 percent surplus.

In a bid to reverse the trend, the IMF noted the new administration’s efforts to swiftly enact a 2025 budget aimed at achieving a 1.5 percent primary surplus.

Key reforms include public financial management upgrades, tighter expenditure rules, and the resumption of quarterly electricity tariff adjustments.

“On the fiscal front, the government has launched an audit of the payables to firm up the size and nature of the slippages. They have also adopted several public financial management reforms, including an enhanced fiscal responsibility framework,” Roudet revealed.

The Bank of Ghana has also raised its policy rate and is tightening liquidity management, aligning with broader fiscal consolidation to bring down inflation.

Despite recent missteps, Ghana’s economy displayed resilience in 2024, according to the Fund.

“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 higher remittances.”

“The Memorandum of Understanding with Ghana’s Official Creditors Committee under the G20 Common Framework has been signed by all parties. The focus is now on finalizing bilateral agreements and engaging other commercial creditors.”