Ghana is at risk of failing its fourth IMF program review due to unmet key indicators and deteriorating fiscal metrics, as revealed by Finance Minister Dr. Ato Forson. Experts warn that without IMF waivers, the country’s ability to pass the review scheduled for April 2025 may be compromised. Immediate government action is needed to address the fiscal challenges and restore investor confidence.
Ghana faces the risk of failing the upcoming fourth review of its International Monetary Fund (IMF) program, according to Joe Jackson, Chief Executive of Delax Finance, and Vish Ashiagbor, Senior Country Partner of PWC Ghana. This concern follows Finance Minister Dr. Ato Forson’s revelation that Ghana did not meet key indicators of the IMF program as of December 2024. Without a waiver from the IMF on certain targets, the likelihood of passing the review due in April 2025 diminishes.
In a recent address to Parliament, Minister Forson noted the potential failure to meet performance indicators essential for the April 2025 review. He emphasized that all structural benchmarks due by the end of December 2024 are likely unmet, indicating a systemic inability to uphold reform commitments. Notably, the December 2024 inflation rate reached 23.8%, exceeding both the budget target of 15% and the IMF’s target of 18%, representing a significant shortfall.
Furthermore, the primary balance, a crucial fiscal metric under the IMF program, deteriorated from a 0.2% deficit of Gross Domestic Product (GDP) in 2023 to 3.9% in 2024. This sharp decline undermines confidence in Ghana’s fiscal management amid critical circumstances. Minister Forson stated, “All structural benchmarks due by end of December are likely missed,” which could raise serious concerns among stakeholders.
In discussions on PM EXPRESS, Mr. Ashiagbor highlighted the potential adverse effects on the Ghanaian cedi if the situation is not properly managed. He noted that investors have reacted negatively to the disappointing fiscal data reported at the end of 2024. He urged the government to adopt innovative solutions swiftly to address these fiscal challenges. Additionally, Jackson called for immediate initiation of conversations regarding an IMF program extension, stressing the need for proactive measures, given the inability to meet significant targets.
In summary, Ghana appears poised to fail its fourth IMF program review, attributed to unmet key indicators and deteriorating fiscal metrics. The Finance Minister’s disclosures raise concerns regarding economic management and investor confidence. Experts underscore the necessity for immediate government action to mitigate potential negative impacts, including discussions on an IMF program extension.
Original Source: www.myjoyonline.com
