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IMF projects Ghana’s Debt-to-GDP Ratio to reach 98.7% by end of 2023

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The International Monetary Fund (IMF) has projected that Ghana’s Debt-to-GDP Ratio will increase further to 98.7% by the end of 2023, according to its Fiscal Outlook Report released at the Annual IMF/World Bank Spring Meetings in Washington DC. The report also forecasted the ratio to reduce marginally to reach 92.8% in 2024.

The Director of Fiscal Affairs at the IMF, Vitor Gaspar, advised the Ghanaian government to ensure that fiscal policy is consistent with monetary policy to restore price and financial stability while supporting the most vulnerable. Gasper said, “Abrupt changes in financial conditions also call for fiscal restraint to tackle fiscal vulnerabilities. To that end, governments will need to give greater priority to rebuilding fiscal buffers by developing credible risk-based fiscal frameworks that promote.”

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Ghana’s recent Domestic Debt Exchange Programme (DDEP) aimed at reducing the country’s debt stock may be affected by the current debt restructuring by the government. The Finance Ministry in its Debt Strategy Paper indicated that the DDEP will end up restructuring about ¢138 billion worth of bonds, however, only ¢98 billion worth of the bonds were tendered for the debt restructuring programme.

Ghana’s Total Debt Stock ending November 2022 stood at ¢575 billion, representing 93.5% of GDP. However, based on the Gross Debt Levels projection, that could be going up by about 5% for 2023. The IMF has classified Ghana’s economy as a Low Income Developing Country.

The IMF also projected that Ghana’s Gross Domestic Product (GDP) growth rate for 2023 will slow to 1.6%, which is lower than Ghana’s forecast of 2.8% captured in the 2023 Budget. The IMF linked the slowdown to some global economic challenges such as the COVID-19, Russia-Ukraine War, and Energy issues and their impact on Ghana’s economy for this year.

In conclusion, the IMF advises the government to focus on rebuilding fiscal buffers to promote sustainable economic growth. As Ghana’s debt-to-GDP ratio continues to rise, the government needs to implement prudent fiscal policies to mitigate the impact of global economic challenges.

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