Economy in last 12 months: Ghana makes progress — IMF Managing Director
The Editor, Graphic, Theophilus Yartey, was privileged to have an exclusive interview with the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, on the performance of the Ghanaian economy and other relevant matters following the country’s return to the institution.
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The interview took place ahead of her scheduled visit to Ghana tomorrow and departure on Monday, March 18, 2024.
Question (Q). Could you tell us why you are visiting Ghana? Why is it important for you to visit now, and what will you do in the coming days?
Answer (A). First, let me thank you for the opportunity to talk about my visit to Ghana. I am thrilled to be here — to learn about the aspirations of the Ghanaian people, and how we at the IMF can work even more closely with Ghanaians to support those aspirations.
In that sense, it has been wonderful to see the good progress that Ghana has made over the past year towards stabilising the economy, fostering a broad-based recovery, and investing for the future.
So, I look forward to discussing with His Excellency President Akufo-Addo and his team how to build on this progress, and how the country’s IMF-supported economic programme can continue to support the government’s reform agenda.
When we look to the future, there is much we can learn from the past. I am planning to visit the Kwame Nkrumah Mausoleum and Memorial Park — his legacy of promoting African unity is so important to meeting the continent’s challenges today.
I also want to hear from others — civil society and business, including women leaders — about how we can continue to create opportunities for all Ghanaians.
One topic I’m very interested in is how economies, and people, can benefit from artificial intelligence, and I want to see what the AI revolution can bring on the ground here.
As a leader in technology in Africa, Ghana has the potential to drive AI innovation and benefit from it because of your large, young and dynamic population, and deep mobile penetration.
But further investment in human capital, and power and digital infrastructure, is needed to fully reap these benefits. I invite your readers to join me online for a discussion of AI on March 18 at imf.org/live.
Q. Months into the IMF programme, how would you assess Ghana's performance so far? Has the IMF identified any risks to the success of Ghana's programme?
A. Ghana's performance under the economic recovery programme has been compelling. The government acted decisively in response to difficult economic and financial circumstances in 2022-23, restructuring its domestic debt and reaching agreement with bilateral creditors on a debt treatment.
It launched efforts to increase revenue and streamline spending. And the government acted to put the energy, cocoa, and financial sectors on sounder financial footings.
This strong package of reforms is helping to stabilise the economy. Growth in 2023 was more resilient than we initially expected, and inflation has been declining rapidly.
The balance of payments and Bank of Ghana’s international reserves have improved, and the exchange rate has become less volatile.
But the job is not finished.
Continued steadfast implementation of the government’s policy adjustment and reform programme will be critical to fully restore economic stability and debt sustainability into next year and beyond.
The authorities have so far shown a strong commitment to reform — this should help limit implementation risks going forward.
I was particularly pleased by President Akufo-Addo’s clear statement at the 2024 State of the Nation address that the government remains fully committed to the policies and reforms under the programme.
Q. There is a school of thought which believes Ghana's programme with the Fund is too revenue-driven and reliant on the introduction of new taxes, with little or nothing being done on the expenditure side. What do you have to say to that?
A. As in many countries, Ghana can benefit greatly from both improving the quality of spending and increasing revenue.
To spend better, the government has started to better prioritise spending, cutting back on programmes which give less “bang for the buck” and improving its investment management practices.
Further progress is needed to make the government’s flagship programmes more cost-effective — the planned annual reviews of these programmes can help.
In terms of mobilising revenue, yes, this is an important pillar of Ghana’s IMF-supported programme. Let me give three reasons why:
First, Ghana has a low revenue base compared to similar economies, making the country more vulnerable to shocks. On the plus side, this creates room to raise resources without creating a disadvantage for Ghanaian businesses compared to businesses in peer countries.
Second, Ghana is using a larger portion of its — relatively lower — revenue to service its debt, leaving less money to spend on other priorities.
And, on that note, Ghana has significant social and infrastructure needs. More revenue is required to fulfil these needs while making budgets and debt sustainable. With the right investments, Ghana can truly unlock the potential of the people!
Q. What does 2024 look like for Ghana's and the world’s economy?
A. The global economy has been surprisingly resilient. After peaking in 2022, inflation is coming down faster than expected in most regions, and growth is holding up. But overall growth remains low — we expect global growth of 3.1 per cent this year — and there are important differences between regions and countries.
Ghana’s economy has also shown exceptional resilience during 2023. And, assuming the IMF-supported programme continues to be implemented fully, we expect inflation to fall further this year, easing pressures on Ghanaian consumers.
We also project that growth will recover to 2.8 per cent in 2024, and international reserves will grow and deficits will continue to decline.
Yet, we know that the global context is not without risk. War and geopolitical fragmentation present risks to the global economy and, in turn, could impact Ghana. The fight against inflation, here and globally, is not yet won.
And, amid these pressures, it is even more critical to persevere with reforms and sound policy choices to build resilience to risks and the foundations for future growth.
Q. How is the IMF working with Ghana to promote transparency and reduce the risk of corruption?
A. I appreciate you raising this important issue. It is a critical matter for both the IMF and the Ghanaian authorities. Strengthening governance and reducing vulnerabilities to corruption can bring enormous benefits to economies. It starts with political will.
The Ghanaian authorities have demonstrated a commitment to improving governance and transparency under their reform programme. Let me give a few examples:
They are bolstering public officers’ accountability by strengthening the asset declaration system. And they're enhancing the Anti-Money Laundering framework by making the beneficial owners of legal entities operating in Ghana more transparent.
Business, civil society, and the public all have an important role to play in fighting corruption. We meet with them and encourage them in every country to hold governments accountable.
To further advance these efforts, the government is collaborating closely with international partners to update its National Anti-Corruption Plan. This includes a request from the government for IMF technical assistance to conduct a Governance and Corruption Diagnostic Assessment. The IMF has done these in-depth assessments in over a dozen countries.
Here, in Ghana, it will evaluate risks, and help the authorities design an action plan with specific prioritised, sequenced recommendations and reforms to enhance transparency and accountability, and prevent and combat corruption.
Q. What are the IMF's views on the current challenges facing Ghana, and do you see any opportunities? Looking forward, does Ghana still have the potential to be an emerging market economy?
A. Over the past four years of global shocks, Ghana has faced many of the same challenges as other economies around the world: changes in commodity prices, intensification of regional conflicts, pressures from climate change, and of course a global pandemic have all been hugely disruptive to people’s lives. And they’ve proven costly for households, businesses and the government.
But the openness of Ghana’s economy has created many wonderful opportunities as your country has traded with the world and drawn in foreign investment and know-how.
When it comes to opportunities, my answer is a resounding yes — Ghana absolutely has the potential to reach emerging market status! Your country’s young and dynamic population, political stability, the quality of your communications infrastructure, and the untapped potential in agriculture and manufacturing are all huge assets.
But achieving that success isn’t automatic. It requires an unwavering commitment to the reforms that I mentioned will be needed to secure Ghana’s potential. If Ghana aligns revenue and spending, equips young people and all workers with the skills to succeed, and makes the country a prime investment destination, the future can be promising.
Also ensuring that all Ghanaians benefit is a key ingredient to achieving growth that stands the test of time. Growth and equality go hand in hand — when policies make it possible for everyone to benefit, then it is possible to achieve more equitable, more resilient and more lasting growth.
That is my hope for Ghana. And I know the Ghanaian people can do it.
