Ghana’s Debt-to-GDP to hit 98.7% by close of 2023 – IMF projects

In its recent Fiscal Outlook Report released at the Annual IMF/World Bank Spring Meetings in Washington DC, USA, the International Monetary Fund (IMF) has projected that the country’s Debt to GDP ratio will increase further to 98.7 percent by the close of 2023.

Advising the government on how Ghana can ensure financial stability, the Director of Fiscal Affairs at the IMF, Vitor Gaspar urged for fiscal policy to be consistent with monetary policy in order to restore price and financial stability, while supporting the most vulnerable.

“Abrupt changes in financial conditions also call for fiscal restraint to tackle fiscal vulnerabilities. To that end, governments will need to give greater priority to rebuilding fiscal buffers by developing credible risk-based fiscal frameworks that promote”, Mr. Gasper said this at the launch of the Fiscal Outlook Report.

The IMF in its report however projected that Ghana’s Debt-to-GDP ratio will reduce marginally to reach 92.8 percent in 2024.

Meanwhile, Ghana recently undertook a Domestic Debt Exchange Programme (DDEP) to reduce the country’s debt stock with talks of an external debt restructuring with foreign creditors ongoing.

Key insights from the IMF reports

• The IMF is projecting that Ghana’s Gross Domestic Product (GDP) growth rate for 2023 will slow to 1.6%. This is lower than Ghana’s forecast of 2.8% captured in the 2023 Budget. The new projection is contrary to the Fund’s predictions in its 2022 World Economic Outlook Report that Ghana’s growth rate for 2023 will be 3.6%.

• The report also classified Ghana’s economy as Low-Income Developing Country.

• The IMF in the report linked the slowdown to some global economic challenges, such as the COVID-19, Russia-Ukraine War, Energy issues and its impact on Ghana’s economy for this year.

• The IMF in the report also forecast the Debt-to-GDP Ratio to reduce marginally to reach 92.8% in 2024.

EAN/MA