Ghana remains exposed to volatility in gold, cocoa and oil prices; domestic risks also persist – IMF

The International Monetary Fund (IMF) has assessed that Ghana's economy remains vulnerable to fluctuations in gold, cocoa, and oil prices, coupled with geopolitical uncertainties and strengthening global financial constraints, according to the IMF's recent review of the country's first Policy Coordination Instrument (PCI). In addition to external factors, Ghana faces domestic challenges such as substantial debt rollovers, fiscal pressures from key sectors like energy, cocoa, and gold, and lingering weaknesses in the financial sector.

The IMF emphasized the importance of prudent monetary policy, enhanced flexibility in exchange rates, bolstered reserve buffers, and the development of a sinking fund to manage maturing debts, as critical measures to maintain stability. It further highlighted the necessity for improved governance, citing the enactment of the Conduct of Public Officers Bill, the release of the second National Ethics and Anti-Corruption Action Plan, and the enhancement of oversight of state-owned enterprises as steps to foster public confidence and private sector investments.

Regarding the PCI's progress, the IMF reported that overall performance has been satisfactory, with most quantitative targets being met. To counteract the recent drop in foreign exchange reserves, the government and the Bank of Ghana have undertaken corrective actions, including the transfer of foreign exchange intermediation duties to GoldBod and the implementation of stricter gold sales requirements for major mining firms.

The IMF stated that consistent execution of these policies, alongside enhanced exchange rate flexibility, is crucial for rebuilding reserves according to the program's objectives.

The Mission also noted that structural reforms are progressing as planned. This includes the submission of the Fiscal Strategy Document, the approval of the new Cocoa Board Act to enhance governance and financial discipline within the cocoa sector, and regular adjustments to electricity tariffs. Additionally, Ghana has completed its comprehensive review of customs and excise legislation ahead of schedule.

Nonetheless, there is a pressing need to finalize the remaining reforms, including the overdue publication of the ECG's collection account audit, to ensure timely completion of all initiatives.

The IMF expressed gratitude to the government and other stakeholders for their welcoming attitude and insightful conversations, affirming their continued commitment to Ghana's objectives of preserving economic stability and fostering robust, equitable, and job-intensive growth.