IMF says COVID-19, Russia-Ukraine war affected Ghana's economy
IMF to further engage government on Enhanced Domestic Program
The International Monetary Fund (IMF) team has concluded its official visit to the country which was aimed at assessing the economic situation as well as engaging in the Enhanced Domestic Program which government intends to enroll.
In a statement by Carlo Sdralevich, mission chief for Ghana, the team observed that the country’s economy was affected by the adverse impact of the COVID-19 pandemic and the Russia-Ukraine war.
Reaffirming the government’s position, IMF said the twin crisis derailed the country’s recovery efforts which led to slowing economic growth, accumulation of unpaid bills, a large exchange rate depreciation, and a surge in inflation.
“Ghana is facing a challenging economic and social situation amid an increasingly difficult global environment. The fiscal and debt situation has severely worsened following the COVID-19 pandemic. At the same time, investors’ concerns have triggered credit rating downgrades, capital outflows, loss of external market access, and rising domestic borrowing costs.
“In addition, the global economic shock caused by the war in Ukraine is hitting Ghana at a time when the country is still recovering from the Covid-19 pandemic shock and with limited room for manoeuvre. These adverse developments have contributed to slowing economic growth, accumulation of unpaid bills, a large exchange rate depreciation, and a surge in inflation,” part of the statement read.
Detailing outcomes of engagements with stakeholders, the team continued in the statement that it discussed issues concerning the country’s package to restore macroeconomic stability as well as debt sustainability.
It added that part of the discussion centred on how to protect the vulnerable and poor in society as the country looked at maintaining its fiscal balance.
“The IMF team held initial discussions on a comprehensive reform package to restore macroeconomic stability and anchor debt sustainability. The team made progress in assessing the economic situation and identifying policy priorities in the near term.
“The discussions focused on improving fiscal balances in a sustainable way while protecting the vulnerable and poor; ensuring the credibility of the monetary policy and exchange rate regimes; preserving financial sector stability; and designing reforms to enhance growth, create jobs, and strengthen governance,” the statement continued.
While affirming its commitment to helping Ghana in the challenging times, the statement further disclosed that the IMF team will be engaging the country’s authorities on the Enhanced Domestic Program
“IMF staff will continue to monitor the economic and social situation closely and engage in the coming weeks with the authorities on the formulation of their Enhanced Domestic Program that could be supported by an IMF arrangement and with broad stakeholders’ consultation
“We reaffirm our commitment to support Ghana at this difficult time, consistent with the IMF’s policies,” the statement added.
The government on July 1 made a U-turn and initiated contacts with IMF on the orders of President Akufo-Addo to the Finance Minister, Ken Ofori-Atta.
The move cumulated into a visit from the IMF team from July 6-13.
During their stay, the team met with Vice President Bawumia, Finance Minister Ken Ofori-Atta, and Governor of the Bank of Ghana, Dr Ernest Addison.
The team also met with the Parliament’s Finance Committee, civil society organizations, and development partners, including UNICEF and the World Bank to engage in social spending.
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The International Monetary Fund