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IMF Praises Ghana’s Fiscal Progress Ahead of December 7 Elections

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The International Monetary Fund( Imf)
The International Monetary Fund( Imf)

The International Monetary Fund (IMF) has lauded Ghana for making significant strides in strengthening its fiscal position, despite the challenges posed by the upcoming general elections on Saturday, December 7, 2024.

In its latest assessment, the IMF highlighted the importance of maintaining fiscal policy adjustments before and after the elections to ensure long-term sustainability. It stressed the need for the government to continue building fiscal space to enhance social programs, reduce financing needs, and protect vulnerable populations from the effects of fiscal consolidation.

The Fund emphasized that efforts to improve domestic revenue mobilisation and streamline primary expenditure are essential to achieving these goals. It also called for continued progress in enhancing tax administration, managing expenditure controls, addressing arrears, and implementing a robust fiscal responsibility framework. Additionally, the IMF urged further improvements in the management of State-Owned Enterprises (SOEs).

“Promptly and forcefully addressing the challenges in the energy sector is also critical to contain fiscal risks,” the IMF stated. It also urged the government to capitalize on the recent successful Eurobond exchange and ensure the timely completion of its comprehensive debt restructuring efforts.

On monetary policy, the IMF praised Ghana’s prudent stance, noting decisive steps to rebuild foreign exchange reserves. However, the IMF stressed that maintaining tight monetary policy, given the inflation risks, and enhancing exchange rate flexibility will be key moving forward.

The IMF’s assessment follows the completion of the third review of Ghana’s 36-month Extended Credit Facility (ECF) arrangement on Monday, December 2. This review paves the way for the immediate disbursement of approximately US$360 million (SDR 269.1 million) to Ghana.

The Fund commended Ghana’s reform efforts under the IMF-supported program, acknowledging that despite the severe economic and financial pressures in 2022, the program has helped stabilize the economy and create the foundation for sustainable, inclusive growth.

“Growth is recovering rapidly, inflation is declining, albeit at a slower pace, and both fiscal and external positions are improving,” the IMF said, noting that while the medium-term outlook remains favorable, there are risks, particularly surrounding the election period and energy sector challenges.

The IMF also confirmed that Ghana has met all quantitative performance criteria and indicative targets for the third review. Despite some delays, the Fund noted good progress in implementing key structural reforms.

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