In the second half of 2023, Ghana’s economy started to recover from the significant challenges it had faced in recent years after securing approval from the International Monetary Fund (IMF) for a three-year economic reform program.
The approval of the three-year IMF program in May was accompanied by the immediate release of a 600-million-U.S dollar tranche as part of the 3 billion dollars loan to the country.
With the implementation of the IMF-supported program, several macroeconomic indicators began to show positive responses. Notably, the exchange rate stabilized around 12 cedis to a U.S. dollar for most of the latter half of 2023.
Recent data from the Bank of Ghana, released on Nov. 27, indicated that, apart from a sharp depreciation of 20.6 percent in January, the Ghana cedi had depreciated by 6.6 percent against the U.S. dollar between February and November. This was in comparison to a 54.2 percent depreciation during the same period in 2022.
Consumer inflation, a crucial macroeconomic indicator, notably declined to 26.4 percent in November.
Ernest Addison, the central bank governor, expressed optimism about the continuous decline in inflation into 2024 during a late November media briefing. He attributed these positive signs in the domestic economy to the IMF-backed program, emphasizing the need to maintain tight monetary conditions, fiscal consolidation and continued reserve accumulation for sustained improvements.
In his Christmas message, Ghanaian President Nana Addo Dankwa Akufo-Addo reassured the nation that the economy had turned a corner after enduring three difficult years, with economic growth showing signs of recovery.
“Inflation is being controlled, we are witnessing relatively stable exchange rates, and economic growth is on the rise,” Akufo-Addo said, adding that “while challenges remain, there is a growing confidence that with hard work and determination, Ghana will overcome these hurdles and secure our future.”
Leslie Dwight Mensah, a research fellow at the Institute for Fiscal Studies in Ghana, highlighted the positive impact of the IMF-backed reforms on Ghana’s economy in a recent interview with Xinhua.
“If we say the economy has turned a corner, it signifies that the economic situation has begun to improve,” Mensah said, underscoring that the IMF program has halted the economic downturn and restored confidence among Ghanaians.
Mensah urged the government to persist in robust fiscal consolidation efforts to bolster Ghana’s prospects for sustained economic recovery.
Over the past three years, Ghana’s economy had faced severe crises marked by high fiscal deficits, escalating public debts, exchange rate fluctuations, high inflation and worsening living costs. The government’s approval of the IMF economic reform program in May aimed to reverse this trend and steer the economy toward recovery.
