IMF identifies Ghana’s key risks post-$3bn loan-supported programme

Ghana officially exited its US$3 billion International Monetary Fund (IMF) Extended Credit Facility (ECF) programme on Friday, May 15, after three years of strict fiscal reforms and economic austerity measures aimed at restoring macroeconomic stability.

Although the programme helped stabilize key sectors of the economy, IMF officials have cautioned that significant challenges remain, warning that the country’s economic recovery is still fragile despite recent gains.

Speaking at a joint press conference in Accra alongside Ghana’s Ministry of Finance, IMF Mission Chief for Ghana, Ruben Atoyan, acknowledged that the programme had succeeded in creating a more stable economic environment and renewed investor confidence in the country.

According to him, several international investors have already shown renewed interest in Ghana following improvements in inflation, exchange rate stability and fiscal management.

“We do see a lot of interest in exposure to Ghana, and the IMF has been bombarded by requests from investors to meet and discuss Ghana going forward,” Mr. Atoyan stated.

However, he stressed that “the grass is still not green,” warning that unresolved structural risks could easily reverse the progress achieved under the programme if not properly managed.

Among the major concerns identified by the IMF are the financial difficulties of state-owned enterprises (SOEs), quasi-fiscal activities outside the central government and Ghana’s continued dependence on volatile commodity prices.

Mr. Atoyan explained that liabilities linked to SOEs have historically contributed significantly to Ghana’s debt burden and remain one of the biggest threats to long-term fiscal sustainability.

He cautioned that if these entities continue to accumulate debt or operate inefficiently, they could place fresh pressure on public finances and weaken economic recovery efforts.

The IMF official also identified commodity price fluctuations, particularly gold prices, as another critical risk facing Ghana’s economy. Gold exports have played a major role in supporting Ghana’s recent economic turnaround and boosting foreign exchange reserves.

However, he warned that global geopolitical uncertainties and changing market conditions could negatively affect commodity prices, creating vulnerabilities for countries heavily dependent on raw material exports.

According to the IMF, addressing these risks will become a major priority under Ghana’s proposed three-year non-financing Policy Coordination Instrument (PCI), which is expected to replace the current bailout arrangement.

The PCI programme will focus primarily on strengthening Ghana’s economic institutions, improving fiscal discipline and preventing the creation of new contingent liabilities outside central government operations.

“The focus is not only on adjustment but also on strengthening domestic institutions to ensure that no contingent liabilities are created outside of the central government,” Mr. Atoyan explained.

He advised the government to use the current favorable commodity market conditions, particularly gains from gold exports, to build stronger fiscal and foreign reserve buffers that can help cushion the economy against future shocks.

The IMF also urged Ghana to carefully control spending by state-owned enterprises and improve oversight of public sector finances to avoid repeating past debt accumulation patterns.

Finance Minister Dr. Cassiel Ato Baah Forson described the completion of the IMF programme as a significant milestone in Ghana’s economic recovery journey.

According to him, the government’s next priority is shifting from economic stabilization to economic growth, job creation and long-term resilience.

“With stabilization achieved, the focus now shifts to growth and jobs,” Dr. Forson stated.

He announced a new flagship economic strategy known as “The New Economy,” which is expected to target critical growth sectors, attract investment and create employment opportunities, particularly for young people.

“Be assured that from stability, we will build resilience, and from resilience, we will build an economy that benefits the masses,” the Finance Minister added.

Ghana entered the IMF-supported programme in May 2023 after facing one of its worst economic crises in decades, characterized by soaring inflation, rapid currency depreciation, rising debt levels and declining investor confidence.

During the three-year programme, the government implemented a series of difficult reforms, including expenditure cuts, debt restructuring and tax adjustments aimed at restoring macroeconomic stability.

The IMF says Ghana has made substantial progress, including lowering inflation, rebuilding international reserves, stabilizing the cedi and restoring confidence in the economy.

However, analysts say sustaining those gains will depend heavily on continued fiscal discipline, structural reforms and the government’s ability to stimulate productive sectors of the economy while protecting vulnerable households from economic hardship.