Minister rallies support for economic upturn

The Minister of Finance, Dr Mohammed Amin Adam, has rallied the support of Ghanaians as the country continues to implement the three-year programme with the International Monetary Fund (IMF) aimed at restoring economic growth and debt sustainability.

He said while the government appreciated constructive criticisms, comments that talked down on the economy were not in the best interests of anybody.

Using the recent decline of the local currency as an example, Dr Amin Adam said the cedi’s struggles could be partly blamed on negative comments and speculations from some sections of the public.

“Good people of Ghana, in this journey towards economic recovery and growth, we have faced challenges, but our resilience and determination have kept us strong. Let us continue to stand united in support of our government's efforts to steer our economy towards a brighter future,” the minister stated.

Dr Amin Adam was speaking at the joint press conference by the Ministry of Finance and the IMF on the approval of Ghana’s second review by the Executive Board of the Fund.

He said the implementation of the policies, measures and interventions under the IMF programme were yielding positive results and, therefore, called for the support of all Ghanaians.

“Let us build on the progress made so far, with patience and hope in our hearts. We are a nation of proud and resourceful people with a 'can-do' spirit that has always propelled us forward. Together, we shall overcome the obstacles and emerge stronger, more united, and more prosperous,” he said.

Economic performance

Dr Amin Adam said the macroeconomic environment continued to remain stable, with Gross Domestic Product (GDP) growth proving to be more resilient and robust than initially programmed.

The economy in the first quarter grew by 4.7 per cent, which is highest since quarter one of 2022. This growth compares to a growth of 3.1 per cent in the first quarter of 2023.

Inflation has also been declining since the beginning of 2023, with the rate dropping from a 22-year high of 54.1 per cent in December 2022, to 23.1 per cent in May 2024. The cedi has, however, been under pressure in recent times, depreciating by over 18 per cent since the beginning of the year.

Dr Amin Adams said key measures being pursued to deal with the recent depreciation included maintaining a tight monetary policy, deepening the ongoing fiscal consolidation programme, intensifying the gold-for-oil and the Bank of Ghana (BoG’s) gold-for-reserves programmes, and the anticipated foreign exchange disbursement inflows from multilateral, bilateral institutions and private sector financial institutions.

The inflows include the IMF’s third tranche of $360 million which hit the accounts of BoG yesterday following the IMF Executive Board’s approval of the second review. Dr Amin Adam said the IMF’s fourth tranche of another $360 million was expected in the last quarter of the year after the IMF Executive Board had approved the third review.

He said the World Bank tranche of $300 million was expected in the third quarter of the year; another $150 million from the World Bank for the Greater Accra Resilient and Integrated Development (GARID) project; $200 million support for small and medium enterprises, and up to $1.5 billion from the cocoa syndicated loan would all help to shore up the local currency.

Important milestone

The IMF Mission Chief to Ghana, Stephane Roudet, said the completion of the second review marked another important milestone in the journey to recovery and towards building a flourishing economy that uplifted every Ghanaian.

He said the progress made by the country under the programme had been remarkable and impressive on every front. “On the fiscal front, to bring public finances back on a sustainable track, the government has continued to adjust the policy stance”.

“The government's primary balance improved by four percentage points of GDP last year, which is quite remarkable. It is set to improve by another one percentage point this year,” he said.

Mr Roudet said that had been achieved by mobilising additional domestic revenue and by streamlining and improving the efficiency of public spending.

“Crucially, these interventions are accompanied by efforts to protect the vulnerable, who are most affected during adjustment programmes,” the IMF Country Mission Chief said.
Going forward, he said, staying the course by adhering to the committed policy and reform agenda remained essential to fully restoring macroeconomic stability and debt stability, especially in the context of the upcoming general election. 

Exchange rate stability

For his part, the Governor of the Bank of Ghana, Dr Ernest Addison, said the improving economic fundamentals and recent breakthroughs in debt treatment, domestic, bilateral and Eurobond, as well as the strong accumulation of foreign exchange reserves under the Gold for Reserve programme provided the basis for stability in the exchange rate going forward.

As of last Thursday, the BoG had accumulated foreign exchange reserves to the tune of $907 million.

“This is nearly double of what we have in the IMF programme targets. The bank will continue to work closely with the commercial banks to ensure that they are well capitalised to deliver on their mandate to support growth,” Dr Addison said.

He added that plans to recapitalise banks were also being implemented, which would strengthen financial stability.

“Most of the banks are ahead of their capitalisation plans and we are confident that the sector will continue to remain sound, liquid and profitable,” the Governor said.

Dr Addison pointed out that the rest of the year would be challenging but the BoG remained resolute, working with the Ministry of Finance and the IMF to ensure that the improving outlook was sustained.