Ghana risks failing to meet the IMF’s fourth program review due to missed key performance indicators, particularly in fiscal management. Figures shared by Finance Minister Dr. Ato Forson indicate that structural benchmarks have not been met, with inflation and primary balance deficits leading to serious concerns. Financial experts call for immediate government action to restore confidence and negotiate an IMF program extension.
Ghana faces a significant risk of failing to pass the fourth review of its International Monetary Fund (IMF) program, scheduled for April 2025. This warning has been issued by Joe Jackson, the Chief Executive of Delax Finance, alongside Vish Ashiagbor, the Senior Country Partner of PwC Ghana. They attribute this potential failure to Ghana’s failure to meet crucial indicators outlined in the IMF program, as reported by Finance Minister Dr. Ato Forson.
In his recent address regarding the 2025 Budget, Dr. Forson highlighted that several key performance indicators required for the IMF review have likely been missed. Particularly alarming is the indication that all structural benchmarks, due by December 2024, are likely unmet, suggesting a systemic failure to fulfill reform commitments. The Minister noted that the end-of-year inflation rate was recorded at 23.8%, well above the budget target of 15% and the IMF’s target of 18%.
Furthermore, the primary balance, which is crucial for the integrity of the IMF program, deteriorated significantly, worsening from a deficit of 0.2% of Gross Domestic Product (GDP) in 2023 to a deficit of 3.9% in 2024. This represents a substantial slippage, undermining confidence in Ghana’s fiscal management during a critical period. Dr. Forson underscored that, “all structural benchmarks due by end of December are likely missed.”
Experts warn of dire implications if these issues are not adequately addressed. Mr. Ashiagbor emphasized the potential negative impact on the Ghanaian cedi if the government fails to manage the situation effectively. He remarked, “We already understand that, investors have started responding negatively to the not so good fiscal data ending 2024.”
Both Jackson and Ashiagbor urged the government to initiate discussions for an extension of the IMF program, noting that it is evident that key targets cannot be met. Timely and innovative solutions are essential for addressing these pressing concerns to restore investor confidence and facilitate economic stability.
In conclusion, Ghana’s ability to pass the upcoming IMF review is under serious threat due to a lack of compliance with essential performance indicators as highlighted by Finance Minister Dr. Ato Forson. The alarming inflation rate and the deteriorating primary balance point to significant fiscal management challenges. Experts stress that urgent government action is necessary to mitigate negative investor sentiment and secure an IMF program extension.
Original Source: www.myjoyonline.com
