Fitch Solutions reports that Ghana will maintain fiscal consolidation under its IMF program, unlikely to withdraw despite failed renegotiations. IMF support is essential for economic stability, although fiscal tightening may face public resistance due to high inflation and increased tax burdens.
Ghana is poised to continue its fiscal consolidation efforts in alignment with the ongoing International Monetary Fund (IMF) program, as noted by Fitch Solutions, a UK-based research firm. The likelihood of Ghana withdrawing from this IMF arrangement is deemed low, especially following unsuccessful attempts to renegotiate terms, given the nation’s dependency on IMF support for achieving external stability.
Fitch Solutions highlighted the importance of IMF funding for Ghana’s liquidity in foreign exchange, which bolsters investor confidence in the country’s economic management and is crucial for maintaining macroeconomic stability. This commitment to fiscal consolidation seeks to enhance the overall economic situation despite the challenges that may arise.
The anticipated fiscal tightening is expected to encounter resistance from the public; even though inflation has declined significantly from a peak of 53.6% in January 2023 to 23.5% in January 2025, it remains considerably higher than the decade-long pre-pandemic average of 12.1%. The effects of reduced government spending and increased taxation are likely to place further burdens on household finances and exacerbate public dissatisfaction.
Fitch Solutions expressed that historical standards will keep protest activities elevated, although they are expected to remain localized and temporary in nature, thereby posing minimal risks to commercial operations across the country. Analysts underscore the necessity for the government to navigate these challenges carefully to ensure ongoing economic stability.
In summary, Ghana is expected to uphold its fiscal consolidation as mandated by the IMF program, which is crucial for external stability and investor confidence. Despite facing public opposition to fiscal tightening, the government must balance these challenges with the need for economic stability. The ongoing inflation rate, coupled with reduced government expenditure, may lead to societal discontent, but protests are anticipated to be transient.
Original Source: www.ghanaweb.com
