The International Monetary Fund (IMF) has commended the Ghanaian government for its proactive response to the COVID-19 pandemic which mitigated its economic impact but contributed to a record fiscal deficit and increased public debt vulnerabilities.
The IMF executive board also noted that the cedi has remained stable against the US dollar within this period.
In its 2021 Article IV consultation with Ghana on Monday, the IMF said the government response helped contain the pandemic and support the economy, but at the cost of a record fiscal deficit.
“…The economic outlook is improving, even though risks remain, including from the evolution of the pandemic and rising debt vulnerabilities,” the statement said.
“The pandemic had a severe impact on economic activity. Growth slowed to 0.4 percent in 2020 from 6.5 percent in 2019, food prices spiked, and poverty increased. The fiscal deficit including energy and financial sector costs worsened to 15.2 percent of GDP, with a further 2.1 percent of GDP in additional spending financed through the accumulation of domestic arrears. Public debt rose to 79 percent of GDP. The current account deficit widened slightly to 3.1 percent of GDP as the decline in oil exports was partially offset by higher gold prices, resilient remittances, and weaker imports. The Ghanaian Cedi remained stable against the US dollar, partly due to central bank intervention, and gross international reserves remained at 3.2 months of imports. External and domestic financing conditions tightened considerably at the start of the pandemic, but have improved since, and Ghana successfully returned to international capital markets for a US$3 billion Eurobond issuance in March 2021”.