An International Monetary Fund (IMF) team, led by Mission Chief Stéphane Roudet, has concluded a visit to Ghana, where discussions centered on the country’s economic performance under the IMF-supported Extended Credit Facility (ECF) and the policy measures that will shape the 2025 budget.
The visit, which took place from February 10 to 14, 2025, provided an opportunity for the IMF to assess Ghana’s progress in meeting its key commitments under the financial support program, as the country continues to navigate economic recovery efforts amid global and domestic fiscal challenges.
In a statement released at the end of the visit, Mr. Roudet acknowledged the Ghanaian government’s efforts in implementing critical reforms and reaffirmed that the country’s progress will be formally evaluated during the fourth review of the ECF arrangement in April. “We reviewed the authorities’ progress in implementing key commitments under the Fund-supported program. These commitments will be formally assessed during the fourth review of the Extended Credit Facility arrangement, scheduled for April 2025,” he stated.
The IMF delegation held high-level meetings with President John Mahama, Finance Minister Dr. Cassiel Ato Forson, and Acting Governor of the Bank of Ghana, Dr. Maxwell Opoku-Afari. Additionally, engagements were held with representatives from various government agencies, financial institutions, and key economic stakeholders. These discussions covered critical areas such as fiscal policy, debt sustainability, monetary policy, revenue mobilization, and structural reforms aimed at strengthening Ghana’s economic resilience.
Government’s Tax Cuts and Revenue Shortfall
A key issue raised during the engagements was the government’s decision to remove certain taxes, including the Betting Tax, the COVID-19 Levy, and the Electronic Transaction Levy (E-Levy). While these tax reductions are aimed at easing financial burdens on individuals and businesses, they are expected to result in an estimated revenue shortfall of GH₵10 billion annually.
The IMF sought clarity on how the government plans to address this revenue gap without disrupting ongoing fiscal consolidation efforts. Government officials assured the delegation that alternative revenue strategies were being explored, including broadening the tax base, improving tax compliance, and enhancing efficiency in public expenditure.
The IMF emphasized the importance of striking a balance between tax relief measures and sustainable revenue generation to ensure that Ghana’s economic stability is not compromised. “The challenge lies in implementing tax policies that provide relief to citizens while maintaining a strong and sustainable revenue stream,” an IMF official noted during the discussions.
Energy Sector Reforms and Fiscal Stability
Another major topic of discussion was the financial health of Ghana’s energy sector, particularly the challenges facing the Electricity Company of Ghana (ECG) and other state-owned enterprises. The IMF mission assessed the government’s progress in reforming the sector and urged authorities to accelerate efforts aimed at addressing inefficiencies and financial losses.
Ghana’s energy sector has long faced structural challenges, including debt accumulation, operational inefficiencies, and tariff-related issues. The government has been considering various measures, including restructuring the management of ECG and exploring public-private partnerships to improve efficiency. The IMF underscored the importance of these reforms, warning that continued financial instability in the energy sector could pose broader risks to the country’s economic outlook.
One key IMF official noted, “Addressing the structural challenges within the energy sector is crucial for Ghana’s long-term fiscal and macroeconomic stability. Sustainable reforms will not only strengthen the sector but also attract investor confidence.”
Inflation Control and Monetary Policy
The IMF delegation also examined Ghana’s monetary policy stance, particularly efforts to control inflation. Over the past year, Ghana has made significant strides in reducing inflation, which had reached record highs in previous years. However, the delegation cautioned that global economic uncertainties, external shocks, and domestic vulnerabilities could threaten these gains if not carefully managed.
The Bank of Ghana assured the IMF team that it remains committed to a prudent monetary policy approach aimed at maintaining price stability. Acting Governor Dr. Maxwell Opoku-Afari reiterated the central bank’s commitment, stating, “The Bank of Ghana remains dedicated to policies that ensure price stability, economic resilience, and sustainable growth.”
While the IMF acknowledged Ghana’s progress in managing inflation, it encouraged authorities to remain vigilant and adopt proactive measures to guard against inflationary pressures that could arise from external factors such as global commodity price fluctuations and exchange rate volatility.
Debt Sustainability and Economic Growth Prospects
Debt sustainability remains a significant concern as Ghana continues negotiations with creditors to restructure its debt obligations. The government has been implementing various measures to manage its debt profile and ensure that it does not derail economic progress.
During the mission, the IMF delegation assessed the impact of ongoing debt restructuring efforts and discussed their potential implications for Ghana’s fiscal health. The government reaffirmed its commitment to implementing policies that promote sustainable growth, job creation, and economic transformation.
An IMF spokesperson highlighted the importance of responsible debt management, stating, “Ensuring debt sustainability is critical to Ghana’s economic recovery. The government’s commitment to sound fiscal policies and structural reforms will be key to maintaining macroeconomic stability.”
Looking Ahead to the Fourth ECF Review
As Ghana prepares for the fourth review of the ECF arrangement in April, meeting program targets will be crucial in securing further support under the IMF program. The IMF delegation emphasized that continued policy dialogue and technical discussions in the coming weeks will be essential to ensuring a successful review.
The outcome of the April 2025 assessment will determine the next phase of Ghana’s engagement with the IMF and the potential disbursement of additional funds to support the country’s economic reforms. Government officials remain optimistic that the measures being implemented will yield positive results, reinforcing confidence in Ghana’s economic outlook.
IMF’s Continued Support for Ghana
At the end of the mission, the IMF expressed appreciation for the Ghanaian authorities’ constructive engagement and commitment to policy implementation. “IMF staff would like to express their gratitude to the Ghanaian authorities and other stakeholders for their constructive engagement and support during this mission,” Mr. Roudet stated.
The coming months will be crucial for Ghana’s economic management, as the government works to meet its IMF commitments while sustaining fiscal and macroeconomic stability. The successful execution of these strategies will play a significant role in shaping Ghana’s economic trajectory in 2025 and beyond.
