Presentation

Case of Ghana
Group I

Financial Programming and Policies Course,

OT24.31
September 16 - 27, 2024
Accra, Ghana
 Outline
1. Recent developments, economy of Ghana before 2023 (1 slide)
2. Baseline scenario in 2023 (2-3 slides)
Assumptions (external and policies)
Outcomes by sector
3. Diagnostics (1-2 slides)
‒ Internal imbalances (GDP, inflation, fiscal)
‒ External imbalances (current account, reserves, external debt)
4. Program scenario (2-3 slides)
‒ Objectives
‒ Policy measures
‒ Results
5. Conclusion (1 slide)
2
Recent developments, economy of Ghana before 2023

1 Pre-Crisis Period
Prior to 2020, Ghana’s economy was characterized as relatively stable, with strong
growth, low inflation, as well as low and reducing current account deficit. But faced
pre-existing vulnerabilities including, growing public debt and low reserves
2 External Shocks
COVID-19 pandemic, Ukraine war , and tightening global financial conditions exacerbated
vulnerabilities
3 Debt Crisis
Public debt reached 93.3% of GDP in 2022, loss of market access, reserves
depletion, currency depreciation

4 Full blown Economic Crisis

GDP growth stalled and inflation accelerated

5 Restructuring Efforts
Government launched debt restructuring strategy and requested IMF support to
restore sustainability
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 BASELINE SCENARIO IN 2023: ASSUMPTIONS
REAL SECTOR ASSUMPTIONS
• GDP growth to decelerate premise on the impact of adverse external developments and domestic
economic challenges
• A slowdown in industry and services would weigh growth on the supply side
• On the demand side, a cut in public consumption and investment, coupled with a decline in private
investment, could more than offset positive gains in net export and drag down growth
• Inflation could persist, reflecting both demand and supply pressures.

FISCAL SECTOR ASSUMPTIONS

• Fiscal consolidation and debt restructuring
• Revenue enhancing policies and rapid expenditure reductions
• Limited external borrowing
• moratorium on external debt servicing

4
 BASELINE SCENARIO IN 2023
External Sector ASSUMPTIONS
• Real exchange rate to further depreciate, followed by improvement in merchandise trade
• Current account might deteriorate driven by services and income
• Financial account could deteriorate, amidst high foreign interest rates, domestic uncertainties and
rapid currency depreciation.
• Depletion of GIR to finance the CA and smoothen volatility in the foreign exchange market

Monetary Sector ASSUMPTIONS

• Monetary policy expected to further tightened to effectively curb inflationary pressures and anchor
inflation expectorations
• Money supply might still grow faster due to increased domestic borrowing amidst limited access to external borrowing
• High interest rate spread due to rising inflation

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 2018 2019 2020 2021 2022 2023*
Real sector andprices %change, unless otherwise indicated
Real GDP 6.2 6.5 0.5 5.1 3.1 2.3
Potential growth 5.0 4.7 4.2 4.0 3.9 3.9
Output gap 0.8 2.6 -1.0 0.1 -0.7 -2.1
Inflation (average) 9.8 7.1 9.9 10.0 31.7 36.2
Fiscal Sector %of GDP, unless otherwise indicated
Revenue 2/ 14.1 15.0 14.1 15.2 15.8 16.2
Expenditure 3/ 20.9 22.5 31.5 27.2 27.7 24.4
Overall balance 4/ -0.6 -0.4 -0.4 -0.4 -0.2 -8.2
Primarybalance 4/ 4.9 5.2 5.9 6.8 7.3 -1.6

BASELINE Central government debt (gross)

External Sector
62.0 58.3 72.3 79.2 93.3
%of GDP, unless otherwise indicated
88.6

SCENARIO Real effective exchange rate (- depreciation)

Current account balance
-0.6
-3.0
-8.2
-2.2
1.8
-2.5
7.1
-2.7
-9.1
-2.1
-9.7
-2.7
IN 2023: External debt
Gross external financingneed
38.6
1.0
41.3
-2.0
46.8
-0.5
46.8
-0.6
48.1
5.0
51.8
5.4

OUTCOME Reserves (in months of imports)

MonetarySector
2.7 3.0 3.5 2.5
%change, unless otherwise indicated
0.7 -1.0

S Net domestic assets

Credit to the private sector
13.5
0.0
12.4
17.4
46.5
3.0
15.8
17.8
40.7
35.4
43.9
66.8
Moneyplus quasi-money(M3) 4.2 17.9 34.6 8.3 28.9 27.5
Velocity(GDP/M3; end of period) 4.3 4.2 3.6 3.5 3.6 3.9
Monetarypolicyrate (in percent; average) 17.0 16.0 14.5 14.5 27.0 30.0
Lendingrate (in percent; average) 15.0 15.5 19.2 16.3 16.1 -3.1
* Indicates baseline projections
2/ Includes grants and VAT refunds.
3/ Includes arrears clearance and discrepancy.
4/ Includes arrears clearance, VAT refunds, and discrepancy. 6