As the 2024 General Elections draw closer, the Executive Board of the International Monetary Fund (IMF) has warned the government of Ghana to maintain fiscal discipline.
This warning was contained in a statement after the Executive Board completed the second review of Ghana’s US$3 billion Extended Credit Facility following the Staff Level Review in April this year.
The IMF indicated that the programne under review has yielded positive results. According to the Executive Board, the programme among other success stories has provided a stable foundation for the government’s macroeconomic adjustments and reforms which are aimed at restoring stability and debt sustainability.
According to the board, specific positive outcomes include economic expansion, declining inflation, improving currency stability, and enhanced fiscal and external positions following the debt restructuring program.
With these gains, the IMF is therefore advising the government to break the jinx of election-year fiscal indiscipline which has the potential to erode the progress of the Extended Credit Facility (ECF).
“These efforts are paying off, with growth proving more resilient than initially expected, inflation declining at a faster pace, and the fiscal and external positions improving. The medium-term outlook remains favorable but subject to downside risks—including those related to the upcoming general elections,” the IMF statement said.
The Executive Board continued that, “looking ahead, sustaining macroeconomic policy adjustment and reforms is essential to fully and durably restore macroeconomic stability and debt sustainability—especially during the upcoming electoral period—while fostering a sustainable increase in economic growth and poverty reduction.”
The IMF further urged the Bank of Ghana to continue to complement the government’s fiscal policies with prudent monetary policies that will help to consolidate the gains made in reducing inflation and rebuilding the country’s reserves.
“Going forward, maintaining an appropriately tight monetary stance, and enhancing exchange rate flexibility are of the essence,” the Deputy Managing Director, Kenji Okamura added.
