Ghana remains exposed to volatility in gold, cocoa and oil prices; domestic risks also persist – IMF

Ghana remains exposed to volatility in gold, cocoa, and oil prices, as well as to geopolitical tensions and tighter global financial conditions, according to the International Monetary Fund (IMF) Mission that reviewed Ghana’s first Policy Coordination Instrument (PCI).

The Mission also warned of domestic risks, including significant domestic debt rollover needs, fiscal pressures from the energy, cocoa, and gold sectors, and remaining financial sector weaknesses.

It, however, pointed out that prudent monetary policy, greater exchange rate flexibility, stronger reserve buffers, and buildup of a sinking fund to pay for maturing debt remain key to safeguarding stability. 

“Strengthening governance remains a priority. Adoption of the Conduct of Public Officers Bill, publication of the second National Ethics and Anti-Corruption Action Plan, and improved oversight of state-owned enterprises will help build public trust and support private investment”, it stated. 

On the performance of the PCI, it said “Performance under the PCI has been broadly satisfactory. Most quantitative targets under this review are met. In response to the decline in foreign exchange reserves in recent months, the authorities [Ministry of Finance & Bank of Ghana] have taken corrective actions, including moving foreign exchange intermediation from the Bank of Ghana to GoldBod, and implementing the higher gold sale requirement for large-scale miners”.

“Steadfast implementation of these measures, alongside greater exchange rate flexibility, will be essential to rebuild reserves in line with program objective”, it added. 

The Mission also mentioned that “Structural reforms remain on track. The authorities published the Fiscal Strategy Document, obtained parliamentary approval of the new Cocoa Board Act to strengthen sector governance and financial discipline, and continued quarterly electricity tariff adjustments. They also completed, ahead of schedule, a comprehensive review of customs and excise legislation”.

It added that work is advancing on reforming the Bank of Ghana’s liquidity management framework, rolling out the Integrated Tax Administration System, operationalizing the Fiscal Council, and preparing the Fiscal Risk Statement. “Completing the remaining reforms on time, including the delayed publication of the audit of the ECG’s collection accounts, will be important”.

The Mission thanked the government and other stakeholders for their warm hospitality and constructive discussions, concluding that the IMF remains a committed partner in Ghana’s efforts to preserve stability and achieve stronger, more inclusive, and job-rich growth.