IMF praises Ghana for ‘reducing debt’

A few days after approving Ghana’s third review under the its Extended Credit Facility (ECF) program the International IMF has praised Ghana for making substantial progress in pushing fiscal deficit and debt down.

Team lead for the IMF team to Ghana Toujas- Joel Bernate in an interview said ‘ In terms of progress, one of the key objectives of the program was to reduce the fiscal deficit and bring the debt accumulation down and on this front the authorities have made quiet some central progress.

We project this year, the fiscal deficit to be about 5% of GDP lower than two years ago. This is a major achievement that we don’t see in many countries in such a period of time’.

Ghana’s three-year arrangement with the IMF which will see the disbursement of a total of US$918 million was approved on April 3, 2015.

The program aims to restore debt sustainability and macroeconomic stability in the country to foster a return to high growth and job creation, while protecting social spending.

IMF program 

The IMF board last week Wednesday approved Ghana’s third review.

The approval of the review by the Fund is expected to lead to the release of 114.6 million dollars to Ghana.

The IMF after the approval said Ghana’s economic outlook still remains challenging.

A statement from the Fund said further efforts are needed to address revenue shortfalls, while expenditure control measures should be fully enforced to contain the wage bill and other current spending, adding that government is projected to run a primary surplus this year, which, along with the stability of the cedi, should contribute to a marked decline in the debt-to-GDP ratio.

‘Ongoing fiscal consolidation and implementation of the medium-term debt management strategy will be key to further reducing domestic refinancing risks in 2017.

The authorities will need to remain cautious in accessing external market financing with due consideration to costs and debt sustainability. It added.


But a few days after it released the statement Team lead for the IMF team to Ghana Toujas- Joel Bernate said despite the challenges Ghana has been able to keep fiscal deficit and debt at bay which is an impressive achievement.


‘This is a major achievement that we don’t see in many countries in such a period of time. This was absolutely needed because of the rapid debt accumulation that we have seen in recent years but still this is really a great achievement and as a result we expect the debt ratio to GDP to decline this year for the first time.

Also we have seen reduced pressures on the exchange rate. Exchange rate in the past depreciated quite substantially. Over the last year it has been remarkably stable thanks to the tight fiscal policy but also tight monitory policy.

so overall good progress but growth has weakened, inflation still remains relatively elevated and also more work is needed in terms of structural reforms to really entrench all the gains that have been achieved so far’.

BoG data on debt

Financial data released by the Bank of Ghana in September, 2016, revealed that although the country’s total debt has increased from 100.2 billion cedis to 109.8 billion cedis between 2015 and July 2016, the total debt to GDP ratio has declined from  71.6 percent at the end of December 2015 to 65.9 percent at the end of July this year.

The debt stock represents a debt to GDP growth from 60.6 percent to 65.9 percent between the six month period.

Although the external component of the debts decreased from 60.7 billion cedis to 60.6 billion cedis between the six month period, the domestic component of the country’s debt increased from 40.4 to 49.2 billion cedis from January to June.

By:  Vivian Kai Lokko/