Ghana’s public debt was 80% of GDP during the Covid-19 pandemic; we will help restore macroeconomic stability – IMF


The International Monetary Fund (IMF) has reiterated that Ghana’s public debt rose from 65% to 80% of gross domestic product during the period of the Covid-19 pandemic.

This is contrary to government figures that government debt to GDP was around 73% of GDP.

In a Frequently Asked Questions (FAQ), the Fund said at the same time that the government’s fiscal efforts to preserve debt sustainability were not seen as sufficient by investors, leading to downgrades. credit rating, exit of non-resident investors from the domestic bond market and loss of access to international capital markets.

“These adverse developments, further exacerbated by price and supply chain shocks resulting from the war in Ukraine, led to a sharp depreciation of the exchange rate, a spike in inflation (29.8% inflation year-on-year in June) and pressures on foreign exchange reserves in recent months. In this context, the government has requested assistance from the IMF, and we have initiated initial discussions on how best to address the challenges of Ghana”.

“An IMF-supported program aims to provide space for Ghana to implement policies that will restore macroeconomic stability and anchor debt sustainability while protecting the most vulnerable segments of the population. It should contribute to creating the conditions for inclusive and sustainable growth and job creation. This will help build policy credibility, ease exchange rate pressures and have a catalytic effect on financing,” he said.

Type of loan program for Ghana

The Fund said its various lending instruments are suited to different types of balance of payments needs as well as specific circumstances of a member country.

Therefore, he pointed out that “we are discussing with the Ministry of Finance and the Central Bank what type of facility would best meet Ghana’s needs.

The previous agreement in Ghana was a three-year ECF in 2015-2018, which was extended for one year until April 2019.

Does Ghana need debt restructuring?

The Fund has stated, in collaboration with the World Bank, that it has yet to carry out a thorough update of the debt situation through a new debt sustainability assessment, which will then be presented to its Board of Directors when considering Ghana’s program application.

In the background, he added that the latest DSA published in the 2021 Article IV Staff Report concluded that: “Public debt was sustainable provided strong and credible implementation of the authorities’ medium-term consolidation plan to place debt on a declining path and ensure continued market access.”

Will the program cause cuts in free high school, others?

The IMF said it was still at an early stage of discussions, but it believes free high school (SHS) is an innovative policy that needs to be protected, adding “in general, IMF-supported programs aim to stimulate social spending while encouraging both efficiency and sustainability”

“As noted above, the IMF-supported program would aim to protect vulnerable people and create conditions for inclusive growth,” he noted.

Objectives of an IMF Program

The Fund said the objective of the government’s national program, which would be supported by IMF financing, is to restore macroeconomic stability and anchor debt sustainability, support the credibility of government policies, restore confidence in the central bank’s ability to manage inflation and accumulate foreign exchange reserves to help the currency weather headwinds.

Regarding the fiscal sector specifically, he stressed that an important policy objective would be to increase revenue, essential for debt sustainability, while preserving expenditure on health, education and social protection.


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