Governor of the Bank of Ghana, Dr. Ernest Addison, has expressed fears of a possible derailment of Ghana’s $3bn Fund programme this year due to the upcoming general elections.
The Governor’s fears are premised on the unsuccessful attempts of the Government to remain fiscally prudent and stick to stringent fiscal consolidation measures in the past election years.
“We must continue with steadfast programme implementation of policies, continue with the fiscal rectitude, continue with the tight monetary policy stance, and pursue the necessary structural reforms to underpin the sustainability of the progress we are making.
“In Ghana’s recent history, we have not been able to successfully implement an IMF-supported programme in an election year without derailment. The Government and the Central Bank are committed to changing that narrative. We recognize the importance of continued macroeconomic stability and an early return to the capital markets, and we will remain committed to ensure that programme implementation stays firm,” he remarked speaking at the joint IMF, Ministry of Finance, and Bank of Ghana press conference on Friday.
Ghana is known to usually overspend during electioneering years resulting in major fiscal slippages.
This is even after the country has made significant strides in fiscal consolidation and revenue enhancement in the years prior to the election year.
Already, the government is projected to run a budget deficit of 5.9% of GDP for 2024 as against the budgeted 4.6% for 2023, comprising GHS 226.7 billion expenditure and a total revenue and grants of GHS176.4 billion.
Meanwhile, the IMF and Ghana have reached a staff-level agreement on economic policies and reforms to conclude the second review of the 36-month ECF-supported programme.
Ghana will have access to about $360 million in financing once the review is approved by IMF Management and formally completed by the IMF Executive Board.
Ghana’s performance under the program has been generally strong, with most quantitative objectives met and key reforms implemented.
According to the IMF, the Ghanaian authorities’ strong policy and efforts have continued to yield positive results: economic growth is higher than initially expected; inflation has continued to decline; and both fiscal and external positions have improved significantly in 2023.