Ghana Faces Risk of Failing Fourth IMF Review Due to Key Indicator Misses
Ghana risks missing the fourth IMF program review, as revealed by Finance Minister Dr. Ato Forson. Key performance indicators are unmet, including missed inflation targets and a worsened primary balance. Experts Joe Jackson and Vish Ashiagbor stress the need for immediate government action to address these critical economic challenges and engage constructively with the IMF.
Ghana is at risk of failing to pass the upcoming fourth review of the IMF program due in April 2025. This warning comes from Joe Jackson, Chief Executive of Delax Finance, and Vish Ashiagbor, Senior Country Partner of PWC Ghana, following Finance Minister Dr. Ato Forson’s assertion that key performance indicators were missed as of December 2024. The situation highlights potential challenges and necessitates engagement with the IMF.
In a recent address to Parliament regarding the 2025 Budget, Minister Forson mentioned that Ghana had not met critical indicators required for the imminent IMF review, sparking concerns over missed structural benchmarks. Most notably, end-year inflation surged, recording 23.8%, which significantly exceeded both the budget target of 15% and the IMF’s target of 18%. This deviation calls into question the government’s reform commitments.
Additionally, the Minister disclosed a significant deterioration in the primary balance, which worsened from a deficit of 0.2% of GDP in 2023 to 3.9% in 2024. This substantial slippage, contrasting sharply with a targeted surplus, raises doubts about Ghana’s fiscal management at this crucial time. Forson noted, “All structural benchmarks due by end of December are likely missed.”
According to Mr. Ashiagbor on PM EXPRESS, inadequate management of the fiscal situation could adversely affect the Ghanaian cedi and investor confidence, indicating a negative reaction to Ghana’s fiscal data. He urged the government to swiftly address these economic challenges and adopt innovative solutions. Jackson echoed this sentiment, asserting the critical need for accelerated dialogue with the IMF regarding program extensions, given the nation’s challenges in meeting key targets.
The warnings from financial experts underline the critical need for Ghana to take immediate and strategic measures to meet its IMF program targets. With key performance indicators missed and deteriorating fiscal performance, the potential absence of a successful review threatens to destabilize the already fragile economic landscape. Urgent action is required from the government to avert further negative implications for the economy and adhere to its commitments under the IMF agreement.
Original Source: www.myjoyonline.com
