Ghana remains exposed to volatility in gold, cocoa and oil prices; domestic risks also persist – IMF
On the performance of the PCI, it said “Performance under the PCI has been broadly satisfactory. Most quantitative targets under this review are met. In response to the decline in foreign exchange reserves in recent months, the authorities [Ministry of Finance & Bank of Ghana] have taken corrective actions, including moving foreign exchange intermediation from the Bank of Ghana to GoldBod, and…
The International Monetary Fund (IMF) Mission that evaluated Ghana's first Policy Coordination Instrument (PCI) has highlighted several risks to the country's economy. The mission noted that Ghana is vulnerable to fluctuations in gold, cocoa, and oil prices, alongside geopolitical tensions and stricter global financial conditions.
Additionally, the IMF expressed concern over domestic risks such as substantial debt rollovers, fiscal pressures from the energy, cocoa, and gold sectors, and ongoing weaknesses within the financial sector.
To mitigate these risks, the IMF stressed the importance of prudent monetary policy, increased exchange rate flexibility, enhanced reserve buffers, and the creation of a fund to manage maturing debts. The mission emphasized that strengthening governance is a top priority. It highlighted several steps taken to improve governance, including the enactment of the Conduct of Public Officers Bill, the release of the second National Ethics and Anti-Corruption Action Plan, and improved oversight of state-owned enterprises.
Regarding the performance of the PCI, the IMF remarked that it has generally been satisfactory, with most quantitative targets achieved. The mission credited the authorities, namely the Ministry of Finance and the Bank of Ghana, for taking corrective actions following a drop in foreign exchange reserves. These actions included reserving foreign exchange through GoldBod and enforcing a higher gold sales requirement for major miners.
The IMF stated that maintaining these measures, combined with enhanced exchange rate flexibility, is crucial for replenishing reserves according to the program's objectives. The mission also noted that structural reforms are progressing as planned. The government has published the Fiscal Strategy Document, secured parliamentary approval for a new Cocoa Board Act to tighten sector governance and financial discipline, and made regular adjustments to electricity tariffs.
Furthermore, the IMF commended the authorities for completing their review of customs and excise legislation ahead of schedule.
The mission also highlighted that substantial work is underway to reform the Bank of Ghana's liquidity management framework, introduce the Integrated Tax Administration System, operationalize the Fiscal Council, and draft the Fiscal Risk Statement. The IMF mentioned that completing the remaining reforms on time, including the late publication of the audit of the ECG's collection accounts, is of utmost importance.
The IMF expressed gratitude to the government and other stakeholders for their warm reception and constructive discussions. It concluded that the IMF remains a steadfast partner in Ghana's pursuit of stability and stronger, more inclusive, and employment-rich growth.
Written by urgent.news from MyJoyOnline Ghana's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
