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IMF Country Report No. 19/367
GHANA
2019 ARTICLE IV CONSULTATION—PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR GHANA
December 2019
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2019 Article IV consultation with Ghana, the following documents have been released and are included in this package:
A Press Release summarizing the views of the Executive Board as expressed during its December 6, 2019 consideration of the staff report that concluded the Article IV consultation with Ghana.
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on December 6, 2019, following discussions that ended on October 19, 2019, with the officials of Ghana on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on November 21, 2019.
An Informational Annex prepared by the IMF staff.
A Debt Sustainability Analysis prepared by the staffs of the IMF and the International Development Association.
A Supplementary Information updating information on recent developments.
A Statement by the Executive Director for Ghana.
The documents listed below have been or will be separately released.
Selected Issues
The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.
Copies of this report are available to the public from
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© 2019 International Monetary Fund
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GHANA
STAFF REPORT FOR THE 2019 ARTICLE IV CONSULTATION
November 21, 2019
Key Issues
Context. The ECF-supported program was completed successfully in March. Since then, the authorities have maintained macroeconomic stability, building on the achievements of the last years. Growth remains strong and inflation is well within the target band. However, while the fiscal stance has improved in recent years, it continues to put pressure on the external position and has not completely offset the impact of contingent liabilities on public debt, which continues to rise. Given Ghana’s history of budget cycles, the 2020 election will be a key test of the authorities’ continued commitment to fiscal discipline. Ghana is now under Post-Program Monitoring.
Outlook and risks. Medium-term prospects are favorable, with robust growth driven mostly by the extractive sector. Election-related spending pressures in 2020 constitute the main risk to the baseline scenario. Fiscal risks in the financial and energy sectors could also impact the government deficit. Government borrowing needs are exposed to rollover risk that should be carefully managed as financing conditions could tighten.
Focus of the Article IV consultation. Discussions focused on strengthening institutions and policies to preserve macroeconomic stability and promote inclusive growth, building on the authorities’ “Ghana beyond Aid” strategy. Specifically:
Fiscal policy: The commitment to the new fiscal rules will help maintain fiscal discipline, as reflected in the unchanged policy baseline. A more ambitious fiscal stance is called for to reduce macroeconomic risks, accelerate debt reduction, and strengthen the external balance. Reducing off-budget spending and avoiding new collateralized debt are needed to improve fiscal transparency and credibility.
Monetary policy: The focus on price stability is appropriate, as is readiness to tighten monetary policy if signs of inflationary pressures emerge.
Structural reforms: Implementation of the Energy Sector Recovery Program (ESRP) and completion of the financial sector clean-up are required to mitigate fiscal risks and support inclusive growth.
Growth: Successful export-oriented growth will depend on continuing strengthening the business environment, including through implementation of the anti-corruption framework and the digitalization agenda.
Approved By
Dominique Desruelle (AFR) and Mark Flanagan (SPR)
Discussions on the 2019 Article IV consultation took place in Accra during September 30 – October 11, 2019, and in Washington, D.C. during October 15–19. The IMF staff team included Carlo Sdralevich (head), Gomez Agou, Frederico Lima and Alice Mugnier (all AFR), Yahia Said (SPR), John Ralyea (FAD), Constant Verkoren (MCM), and Albert Touna Mama (resident representative). Ms. Marian and Mr. Figueroa (both LEG) joined the first days of the mission, and Mr. Kwasi Osei-Yeboah (Advisor, ED office) participated in the discussions. The IMF team met with Vice President Bawumia; Finance Minister Kenneth Ofori-Atta; Bank of Ghana Governor Ernest Addison; other senior officials; and representatives of the donor community and private sector. Jean Vibar and Christelle Ndome-Yandun (AFR) ably contributed to the preparation of this report.
Contents
CONTEXT: ENTRENCHING MACROECONOMIC GAINS
RECENT ECONOMIC DEVELOPMENTS
OUTLOOK AND RISKS
POLICY DISCUSSIONS: DELIVERING MACROECONOMIC STABILITY AND INCLUSIVE GROWTH
A. Preserving Fiscal Sustainability
B. Strengthening Monetary and Exchange Rate Policies
C. Delivering Sustained and Inclusive Growth
STAFF APPRAISAL
BOXES
1. Fiscal Rules
2. Diversification through Industrial Policy
3. Energy Sector Challenges
FIGURES
1. Recent Economic Developments
2. Alternative Policy Scenario
3. Recent Fiscal Developments
4. Recent Debt Developments
5. Recent Monetary Developments
6. Economic Growth and Living Standards 1990–2018
7. Private-Sector Credit Developments
TABLES
1. Selected Economic and Financial Indicators, 2017–24
2a. Summary of Budgetary Central Government Operations, 2017–24 (GFS 2001, Cash Basis, Percent of GDP)
2b. Summary of Budgetary Central Government Operations, 2017–24 (GFS 2001, Cash Basis, Millions of GHc)
2c. Summary of Budgetary Central Government Operations, 2017–24 (GFS 2001, Commitment Basis, Percent of GDP)
2d. Summary of Budgetary Central Government Operations, 2017–24 (GFS 2001, Commitment Basis, Millions of GHc)
3. Monetary Survey, 2017–24
4. Balance of Payments, 2017–24
5. Financial Soundness Indicators
6. Monitoring Progress towards the Sustainable Development Goals
ANNEXES
I. Recommendations of the 2017 Article IV Consultation
II. Risk Assessment Matrix (RAM)
III. External Sector Assessment
IV. Improving Domestic Revenue Mobilization
V. Capacity Development Strategy
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GHANA
STAFF REPORT FOR THE 2019 ARTICLE IV CONSULTATION—DEBT SUSTAINABILITY ANALYSIS
November 21, 2019
Approved By
Dominique Desruelle and Mark Flanagan (IMF) and Marcello Estevão (IDA)
Prepared by the staffs of the International Monetary Fund (IMF) and International Development Association (IDA)
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GHANA
STAFF REPORT FOR THE 2019 ARTICLE IV CONSULTATION—INFORMATIONAL ANNEX
November 21, 2019
Prepared By
The African Department (in consultation with other departments)
Contents
FUND RELATIONS
JOINT WORLD BANK-IMF WORK PROGRAM, 2019–20
STATISTICAL ISSUES
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GHANA
STAFF REPORT FOR THE 2019 ARTICLE IV CONSULTATION—SUPPLEMENTARY INFORMATION
December 3, 2019
Approved By
Dominique Desruelle (AFR) and Mark Flanagan (SPR)
Prepared by the Ghana team
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Press Release No. 19/455
FOR IMMEDIATE RELEASE
December 12, 2019
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