Ghana’s Commitment to Fiscal Consolidation Under IMF Guidance

Ghana is expected to maintain its fiscal consolidation efforts aligned with the IMF program, according to Fitch Solutions. The country is unlikely to withdraw from the IMF arrangement due to its reliance on external support for economic stability. While fiscal tightening may stabilize the economy, it could lead to public resistance amid persistent inflation.

Fitch Solutions has indicated that Ghana will continue its fiscal consolidation efforts as part of its ongoing International Monetary Fund (IMF) program. The research firm suggests that the likelihood of Ghana exiting the IMF arrangement is minimal, primarily due to the nation’s dependency on IMF assistance for ensuring external stability and confidence in its economic management.

The importance of IMF funding for Ghana cannot be overstated, as it is crucial for maintaining foreign exchange liquidity and bolstering investor confidence, which collectively contribute to macroeconomic stability. As such, continued adherence to the IMF program is expected despite various challenges ahead.

Fitch Solutions also forecasts that fiscal tightening, although set to stabilize the economy, is likely to meet public resistance. Even though inflation has decreased from a high of 53.6% in January 2023 to 23.5% in January 2025, it remains significantly above the pre-pandemic average.

Furthermore, the reduction in government spending combined with an elevated tax burden is predicted to exert additional financial pressure on households, thus potentially inciting public discontent. Fitch Solutions noted that while this unrest will likely remain within localized and temporary protests, it may still disrupt commercial activities in the region.

In summary, Fitch Solutions emphasizes that Ghana will persist with its fiscal consolidation in alignment with the IMF program, crucial for economic stability. While this strategy may face public pushback due to ongoing inflation and increased fiscal burdens, the importance of maintaining IMF support is identified as vital for Ghana’s economic viability and external stability.

Original Source: www.ghanaweb.com