Proposed revision of Ghana’s program should be guided by ECF objectives, warns IMF

The International Monetary Fund (IMF) has revealed that proposals to renegotiate Ghana’s program must be guided by the fiscal objectives of the Extended Credit Facility (ECF).

The IMF noted that leading presidential candidates ahead of the December 7 elections “have also promised large spending programs, which will need to be carefully executed to ensure continued compliance with the program’s fiscal targets.”

These concerns were expressed in the IMF staff report, which was submitted to its Executive Board on December 2, 2024, following discussions with the government late October 4, 2024.

President-elect John Dramani Mahama has already pledged to review and adjust Ghana’s existing arrangements with development partners such as the IMF and the World Bank to align them with the country’s current needs and aspirations.

Ghana received some $360 million from the IMF in December 2024 after successfully passing the third review.

The IMF’s concerns come as President-elect John Mahama has indicated he will renegotiate Ghana’s program with the IMF and World Bank.

The IMF staff report was completed on November 13, 2024. However, checks with the IMF indicated that some of the concerns remain.

The IMF noted in its report, however, that some of the promises of these presidential candidates, such as combating debt risks, increasing employment and combating the high cost of living, are consistent with the objectives of the current program supported by the FEC.

“Ensuring diligent implementation of the program before and after the next elections is essential and warrants strong commitment from all stakeholders,” he said.

Risk to the Ghana program

The IMF, in its staff report, congratulated the government for the significant progress made under the fund program.

“The authorities adjusted their macroeconomic policies and launched comprehensive reforms, which had an impact on growth and inflation. There is little room for complacency, as vulnerabilities still exist and will require perseverance,” the IMF warned.

According to the IMF, a further reduction in the government’s budget deficit is necessary by increasing domestic revenues and better controlling public spending.

The IMF also noted that depending on how the political transition is managed, it could have a negative impact on Ghana’s agenda in the future.

“Assurances from the main political parties on the continuity of policies and reforms could help mitigate these risks,” he stressed.

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