The IMF says Ghana’s fiscal and debt situation have worsened due to the impact of the Covid-19 pandemic and Russia-Ukraine war.
It says the external shock affected “investors’ concerns and triggered credit rating downgrades, capital outflows, loss of external market access, and rising domestic borrowing costs.”
Government of Ghana had already cited the two as the cause of the country’s economic challenges, even though many Ghanaians took a swipe at it.
The International Monetary Fund (IMF) staff team led by Carlo Sdralevich concluded its visit to Ghana on Wednesday July 13, 2022.
The team arrived in the country July 6 to assess the current economic situation and discuss the broad lines of the government’s Enhanced Domestic Programme that could be supported by an IMF lending arrangement.
The IMF team met with Vice President Dr Mahamudu Bawumia, Finance Minister Ken Ofori-Atta, and Governor Ernest Addison of the Bank of Ghana.
They also met with the Parliament’s Finance Committee, civil society organizations, and development partners, including UNICEF and the World Bank to engage on social spending.
At the conclusion of the mission, Mr. Sdralevich issued the following statement saying “Ghana is facing a challenging economic and social situation amid an increasingly difficult global environment. The fiscal and debt situation has severely worsened following the COVID-19 pandemic.”
“In addition, the global economic shock caused by the war in Ukraine is hitting Ghana at a time when the country is still recovering from the Covid-19 pandemic shock and with limited room for maneuver. These adverse developments have contributed to slowing economic growth, accumulation of unpaid bills, a large exchange rate depreciation, and a surge in inflation.
“The IMF team held initial discussions on a comprehensive reform package to restore macroeconomic stability and anchor debt sustainability. The team made progress in assessing the economic situation and identifying policy priorities in the near term. The discussions focused on improving fiscal balances in a sustainable way while protecting the vulnerable and poor; ensuring credibility of the monetary policy and exchange rate regimes; preserving financial sector stability; and designing reforms to enhance growth, create jobs, and strengthen governance.
“IMF staff will continue to monitor the economic and social situation closely and engage in the coming weeks with the authorities on the formulation of their Enhanced Domestic Program that could be supported by an IMF arrangement and with broad stakeholders’ consultation
“We reaffirm our commitment to support Ghana at this difficult time, consistent with the IMF’s policies.
“Staff express their gratitude to the authorities, civil society, and development partners for their constructive engagement and support during the mission.”
The Government of Ghana on Friday July 1 announced that it was seeking support from the IMF, directing the Finance Ministry to commence engagement with the Fund. It followed a telephone conversation between the President and the IMF Managing Director, Kristalina Georgieva, according to a statement from the Ministry of Information.
By Felix Anim-Appau|Onuaonline.com|Ghana