The emergence of large fiscal and external imbalances since 2012, however, has created significant challenges. A swift return to macroeconomic stability in 2013 was thwarted by weaker external and domestic conditions. Reflecting lower gold and cocoa exports, the current account deficit exceeded 12 percent of GDP. While recently revised estimates point to an only moderate slowdown in growth to about 7 percent, the fiscal deficit target of 9 percent of GDP was missed by about 1 percentage point, despite significant policy efforts. Inflation also overshot the 9 +/- 2 percent target range, prompting a further tightening of monetary policy in early 2014.
Executive Board Assessment2
Executive Directors commended
Directors, however, expressed concern over the emergence of significant short-term vulnerabilities stemming from high fiscal and external current account deficits. These imbalances make the country vulnerable to a deterioration of external conditions and are creating pressure on interest rates and the exchange rate. If unaddressed, they risk weakening economic growth and public debt sustainability. Directors emphasized that macroeconomic stability will need to be restored to preserve a positive medium-term outlook.
Directors commended the authorities' policy efforts and supported the fiscal measures in the 2014 budget. They noted however that achieving the 2014 fiscal deficit target will be challenging, in light of high interest rates, a depreciating currency, and a possible growth slowdown. Directors therefore urged the authorities to take additional short-term measures to reduce the fiscal and external imbalances.
Directors welcomed the government's recent policy documents outlining its homegrown medium-term reform and consolidation measures. They supported the government's intention to rationalize public spending, lower the wage bill, restructure the statutory funds, and enhance revenue mobilization and tax administration. They encouraged the authorities to translate their policy commitments quickly into specific and time-bound action plans to achieve significant and durable consolidation.
In light of current imbalances, Directors recommended a more ambitious medium-term consolidation path to stabilize public debt and debt service at sustainable levels. While the risk of debt distress remains moderate, Directors expressed concerns about the high debt service-to-revenue ratio. A stronger medium-term adjustment could set off a virtuous cycle of lower fiscal deficits and falling interest rates, creating space for social and infrastructure spending and crowding-in of private sector activity.
Directors welcomed the recent monetary policy tightening. They suggested that further tightening may be needed, in combination with fiscal consolidation, to steer inflation back into the target range. Directors stressed that the Bank of
Directors emphasized that the new foreign exchange regulations will not be effective unless the underlying macroeconomic imbalances are resolved. In particular, they were concerned that the measures could have unintended adverse effects. They therefore welcomed the Bank of
Directors welcomed that the financial system is currently sound, adequately capitalized, and liquid. They stressed the need to monitor exposures closely, noting that a weaker macroeconomic outlook, rising interest rates, and currency depreciation expose the financial sector to credit and currency risks. Accordingly, Directors encouraged the authorities to strengthen their crisis prevention and management capabilities and welcomed recent actions to improve the bank supervision framework.
2011 2012 2013 2014
Act. Act. Est. Proj.
(Annual percent change ; unless otherwise specified)
National account and prices
GDP at constant prices
15.0 8.8 7.1 4.8
Real GDP (nonoil)
9.4 8.1 6.5 4.5
Real GDP per capita
12.1 6.1 4.5 2.2
13.0 15.2 16.4 13.0
Consumer price index (annual average)
2 11.7 13.0
Consumer price index (end of period)
8.6 8.8 13.5 12.3
Money and credit
Credit to the private sector
29.0 32.9 29.0 17.8
Broad money (M3, including foreign currency deposits)
29.3 24.3 19.1 21.2
Velocity (GDP/M2, end of period)
3.9 4.0 4.2 4.1
31.1 36.0 15.1 18.8
Banks' lending rate (weighted average; percent)
25.9 25.7 25.6 ...
Policy rate (in percent, end of period)
12.5 15.0 16.0 ...
(Percent of GDP)
Current account balance
(including official grants)
-9.1 -11.9 -12.3 -10.2
(excluding official grants)
-9.7 -12.5 -12.5 -10.5
External public debt (including IMF)
21.0 22.1 23.8 29.9
NPV of external debt outstanding
10.9 9.9 8.4 9.3
percent of exports of goods and services
28.8 24.4 25.0 24.0
Gross international reserves (mn. of US$)
5,383 5,349 5,632 4,738
Months of prospective Imp. of goods services
2.9 2.9 3.2 2.7
Total donor support (millions of US$)
1,477 1,132 940 1,110
percent of GDP
2.5 2.7 2.0 2.6
Central government budget
19.1 18.6 16.7 19.5
23.1 30.2 26.8 28.9
Overall balance (financing basis)
-4.0 -11.7 -10.1 -9.4
Net domestic financing
3.3 9.2 6.7 6.7
Central government debt (gross)
43.7 50.0 53.2 59.4
22.8 27.9 29.4 29.5
21.0 22.1 23.8 29.9
Central government debt (net)
39.9 47.9 48.2 57.3
Nominal GDP (millions of GHc)
59,816 74,959 93,461 110,676
GDP per capita (millions of U.S. dollars)
1,594 1,663 1,864 1,602
Sources: Ghanaian authorities; and IMF staff estimates and projections.
1 Including deferred wage payments and discrepancies.
1 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
2 At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.imf.org/external/np/sec/misc/qualifiers.htm.
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