IMF describes Ghana’s economic outlook as improving

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Pulse-gh July 22, 2021 1:38 a.m.

IMF describes Ghana’s economic outlook as improving

The 2021 budget envisages a fiscal deficit of 13.9 per cent of GDP in 2021, including energy and financial sector costs, and a gradual medium-term fiscal adjustment which would support a decline in public debt starting in 2024.

The statement also noted that Ghana’s fiscal deficit dropped to 15.2 per cent of GDP and a further 2.1 per cent of GDP on additional spending with the aid of bulk domestic arrears, including energy and financial sector costs.

The fiscal deficit including energy and financial sector costs worsened to 15.2 per cent of GDP, with a further 2.1 per cent of GDP in additional spending financed through the accumulation of domestic arrears.

Directors commended the Ghanaian authorities for their proactive response to the COVID-19 pandemic, which mitigated its economic impact, but contributed to a record fiscal deficit and increased public debt vulnerabilities.

Directors noted that the financial sector cleanup had made the sector more resilient but stressed that banks’ growing holdings of sovereign debt creates risks and crowds out private sector credit.

“…The economic outlook is improving, even though risks remain, including from the evolution of the pandemic and rising debt vulnerabilities,” the statement said.

External and domestic financing conditions tightened considerably at the start of the pandemic, but have improved since, and Ghana successfully returned to international capital markets for a US$3 billion Eurobond issuance in March 2021,” the statement said.

The current account deficit is projected to improve to 2.2 per cent of GDP, supported by a pickup in oil prices, and gross international reserves are expected to remain stable.

The current account deficit widened slightly to 3.1 per cent of GDP as the decline in oil exports was partially offset by higher gold prices, resilient remittances, and weaker imports.

In its 2021 Article IV consultation with Ghana on Monday, the IMF said the government response helped contain the pandemic and support the economy, but at the cost of a record fiscal deficit.

External and domestic financing conditions tightened considerably at the start of the pandemic, but have improved since, and Ghana successfully returned to international capital markets for a US$3 billion Eurobond issuance in March 2021.

Read the IMF’s full statement below: IMF Executive Board Concludes 2021 Article IV Consultation with Ghana FOR IMMEDIATE RELEASE Washington, DC – July 20, 2021:The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Ghana on July 19, 2021.

The economic outlook is improving, even though risks remain, including from the evolution of the pandemic and rising debt vulnerabilities..

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