Ghana’s external economic position in 2023 was moderately stronger than what would typically align with underlying fundamentals and ideal policy measures, according to the International Monetary Fund (IMF). Fiscal consolidation, combined with strong gold exports, deferred external interest payments, and significant remittance inflows, contributed to a noticeable narrowing of the current account (CA) deficit.

The IMF noted that Ghana’s gold-for-reserves program led to faster-than-expected growth in gross international reserves. Looking ahead to 2024, the country’s strong gold export performance is expected to offset a sharp decline in cocoa exports, resulting in further improvements in the current account balance.

Progress on Debt Restructuring to Secure Long-term Sustainability

The IMF emphasized that completing Ghana’s debt restructuring efforts and continuing the implementation of its IMF-supported program are crucial to ensuring long-term debt sustainability. These measures, along with disciplined fiscal management and structural reforms aimed at economic diversification and improving the business climate, are expected to enhance external competitiveness. They will also help shift financing for capital investments away from debt reliance toward attracting more Foreign Direct Investments (FDI).

Resurgence of Gross Reserves

Ghana’s Gross International Reserves experienced a significant recovery in 2023, rising from $1.5 billion in 2022 to $3.6 billion (equivalent to 1.6% of prospective imports). This improvement was largely driven by the Bank of Ghana’s extensive gold purchasing under its gold-for-reserves initiative.

Despite this progress, challenges remain. External debt levels remained high at 50% of GDP, and FDI inflows further declined, dropping from $1.5 billion in 2022 to $1.3 billion in 2023.

Source: TheDotNews