IMF maps out Ghana's next economic test after bailout ends
Ghana's economic recovery will depend on whether it can sustain tough fiscal and structural reforms long after its $3bn bailout programme has ended, the International Monetary Fund (IMF) has warned, outlining a 10-point agenda it says is critical to preventing another economic crisis.
The Fund said the completion of the bailout should not be viewed as the end of Ghana's reform programme, urging the government instead to focus on raising domestic revenue, completing debt restructuring, strengthening the independence of the Bank of Ghana and reforming loss-making state-owned enterprises.
The warning came after the IMF Executive Board approved the sixth and final review of Ghana's Extended Credit Facility (ECF) programme, unlocking a final disbursement of about $371m and bringing the three-year bailout to a close.
The programme, approved in May 2023 following Ghana's 2022 economic crisis, helped restore macroeconomic stability after soaring inflation, a weakening currency and an unsustainable public debt burden.
With the programme completed, Ghana will transition to a new 36-month Policy Coordination Instrument (PCI), a non-financing arrangement intended to support continued reforms, strengthen policy credibility and reinforce investor confidence.
Although the PCI does not provide fresh funding, the IMF said it should serve as the anchor for Ghana's post-bailout economic agenda and demonstrate to investors, development partners and credit rating agencies that the country remains committed to prudent macroeconomic management.
The Fund outlined 10 priority reforms that it says are essential to consolidating Ghana's recovery, safeguarding debt sustainability and building long-term economic resilience.
The IMF's key post-bailout priorities
1) Sustain investor confidence through the PCI
The IMF wants Ghana to use the Policy Coordination Instrument as the framework for its post-bailout reforms, signalling continued commitment to sound economic management despite the end of IMF financing.
2) Raise more domestic revenue
The Fund describes stronger domestic revenue mobilisation as central to Ghana's long-term fiscal sustainability. It wants the government to broaden the tax base, improve tax administration and increase domestic revenue to finance development while reducing reliance on borrowing.
3) Protect the independence of the Bank of Ghana
The IMF says preserving the operational independence of the central bank is essential for maintaining monetary policy credibility. It wants the Bank of Ghana to permanently discontinue quasi-fiscal operations and complete the transfer of its domestic gold purchase programme to GoldBod.
4) Recapitalise the central bank
While noting that inflation has fallen significantly during the programme, the IMF says Ghana must honour its commitment to recapitalise the Bank of Ghana by 2032 to strengthen its balance sheet and support long-term financial stability.
5) Complete external debt restructuring
Although Ghana has reached agreements with official creditors and most commercial creditors, negotiations with a small group of external commercial creditors remain outstanding. The IMF wants those discussions concluded through good-faith negotiations to complete the country's debt restructuring.
6) Reform state-owned enterprises
The IMF continues to identify state-owned enterprises in the energy and cocoa sectors as major fiscal risks. It is urging stronger governance, improved financial oversight and reforms to prevent them from creating future debt pressures.
7) Keep public debt on a sustainable path
The Fund wants fiscal policy to remain anchored around Ghana's objective of reducing public debt to 45% of gross domestic product by 2034. It says government spending should remain consistent with long-term debt sustainability even as fiscal pressures ease.
8) Strengthen the financial sector
Although Ghana's financial system has become more resilient, the IMF says vulnerabilities remain in some state-owned and private banks, as well as specialised deposit-taking institutions. It recommends stronger supervision, timely corrective action and completion of the country's financial sector crisis management and resolution framework.
9) Expand social protection
The IMF says fiscal consolidation should be accompanied by stronger support for vulnerable households. It wants improved fiscal performance to be used to strengthen social protection while ensuring economic recovery remains inclusive and supports private sector-led growth.
10) Advance governance reforms
The Fund says stronger governance will be critical to sustaining investor confidence and public trust. It is calling for the effective implementation of the revised asset declaration framework and the timely passage of the Conduct of Public Officials Bill.
The IMF said the completion of the bailout marks the beginning of a new phase in Ghana's economic recovery, with future progress depending on the government's ability to sustain reforms, preserve macroeconomic stability and strengthen confidence among investors without the backing of an IMF financing programme.