Government has reached a staff level agreement (SLA) with the International Monetary Fund (IMF) for a first review of the IMF-supported Post COVID-19 Programme for Economic Growth (PC–PEG).
This consensus comes after five months of negotiations, and paves the way for further progress toward approval of the first review by the IMF Executive Board in November 2023.
Finance Minister Ken Ofori-Atta, speaking in Accra at a joint press conference with the IMF, expressed optimism about the economy’s outlook, saying: “The economy is responding positively and strongly to the news of government and the IMF reaching an SLA for the first review; and we are eager to leverage this momentum to the very moment when the IMF Executive Board approves the first review in November”.
Strong performance leading to SLA
He said the SLA is indicative of the strong performance in meeting end-June 2023 performance indicators – including six quantitative performance criteria and three indicative targets, as well as three structural benchmarks. These achievements underscore Ghana’s commitment to economic recovery and stability.
Year-to-date data reflect significant improvements in economic performance. The gross domestic product has rebounded strongly, averaging 3.2 percent in the first two quarters of 2023.
Inflation, on the other hand, has been on a relatively downward trend; dropping to 40.1 percent in August 2023 while the cedi has remained stable, with a cumulative depreciation of about 23.5 percent year-to-date. The fiscal front shows a surplus of about GH¢2billion in H1 2023, exceeding the target.
IMF Mission Chief for Ghana, Stéphane Roudet, praised the country’s efforts in managing the challenges.
“Faced with an acute economic and financial crisis, the authorities have adjusted macroeconomic policies, successfully completed their domestic debt restructuring operation and launched wide-ranging reforms,” he added.
He also highlighted that Ghana is on track to lower the fiscal primary deficit by about 4 percentage points of GDP in 2023. Another positive, he noted, is the expansion of social protection programmes.
BoG’s role in economic recovery
Dr. Ernest Addison, Bank of Ghana Governor, acknowledged the positive results of government’s measures and the Bank’s actions. He noted that non-food inflation has dropped significantly, while food inflation and core inflation have also decreased.
Dr. Addison emphasised the importance of sustaining these gains and maintaining a tight monetary policy stance until inflation is firmly anchored.
The Governor also highlighted the innovative gold reserves programme, which he said has contributed to building reserves of about US$650million.
While the IMF programme’s first review is imminent following the SLA, it is crucial to recognise that this is just one step in the approval process. In this vein, it is imperative that government remains focused on securing agreements with official creditors and continuing reforms to solidify the economic recovery process.