IMF: Ghana’s debt sustainable but still at high risk

The International Monetary Fund (IMF) has assessed Ghana’s public debt as sustainable, citing progress in external and domestic debt restructuring efforts. However, the country remains at high risk of debt distress due to near-term vulnerabilities.

In its Fourth Review under the Extended Credit Facility (ECF), the IMF explained that its debt sustainability outlook is based on a full post-restructuring macro framework. This includes:

Domestic debt restructuring, the resolution of official bilateral claims via Ghana’s Official Creditor Committee (OCC), the successful Eurobond exchange, and anticipated agreements with external commercial creditors.

“Ghana is assessed at high risk of debt distress due to current breaches of Debt Sustainability Analysis thresholds,” the IMF stated. “However, risks are expected to moderate by end-2028 as all debt indicators fall below their respective thresholds.”

The Fund also noted that Ghana’s international reserves are expected to hit 3.0 months of import cover by the end of the programme, helping to close the country’s exceptional financing gap.

Fiscal Concerns Remain

Despite some progress, the IMF flagged a worrying deterioration in Ghana’s fiscal performance in the lead-up to the 2024 general elections. Preliminary data showed that:

The primary balance on a commitment basis recorded a deficit of 3.3% of GDP, far off from the programmed surplus of 0.5%.

The deterioration was largely due to a net buildup of arrears, estimated at 2.6% of GDP.

While revenue collection met expectations, the gap highlights concerns over fiscal discipline during election cycles, a pattern the Fund has repeatedly warned about in similar reviews.