The team from the International Monetary Fund (IMF) has concluded its visit to Ghana after President Nana Addo Dankwah Akuffo-Addo called the Managing Director, Kristalina Georgieva, seeking an extended credit facility for the country.
Hundreds took to the streets of Ghana’s capital Accra last month to protest against high inflation and weak growth.
Consumer inflation in Ghana accelerated to 29.8 percent annually in June from 27.6 percent in May, official data showed on Wednesday, shattering another record while the West African nation talks to the International Monetary Fund (IMF) for support.
*Inflation last hit 29 percent in January 2004.
In a report on Wednesday, the country’s statistics agency said June prices were driven higher by items such as fuel and bread, with prices of imported goods rising more than domestically produced ones for the third month in a row.
The team led by Carlo Sdralevich arrived in Ghana on Tuesday, July 5 and started engagements the following day.
The team met Vice President Dr Alhaji Mahamudu Bawumia, staff of the Ministry of Finance, and the sector minister, members of the Finance Committee of Parliament, civil society organisations, among others.
The engagements were basically to gather data in order to assess the facility to provide Ghana.
Transport, which includes fuel, registered the highest price growth at 41.6 percent. Diesel saw 99.7 percent year-on-year inflation while petrol prices were up 69.4 percent.
Housing, which includes water, electricity and gas, saw a 38.4 percent increase and food inflation rose to 30.7 percent. Bread prices were up 44.5 percent.
Hundreds took to the streets of Ghana’s capital Accra last month to protest against high inflation, weak growth and a plummeting local currency. Days later, four of Ghana’s largest teachers’ unions said they would strike if their wages were not increased in tandem with rising prices.
After pledging not to return to the IMF, the government said shortly after the protests that it would seek an economic support package to ward off a “fully blown crisis”.
At the conclusion of the mission, Mr. Sdralevich issued the following statement:
“Ghana is facing a challenging economic and social situation amid an increasingly difficult global environment. The fiscal and debt situation has severely worsened following the COVID-19 pandemic. At the same time, investors’ concerns have triggered credit rating downgrades, capital outflows, loss of external market access, and rising domestic borrowing costs.
“In addition, the global economic shock caused by the war in Ukraine is hitting Ghana at a time when the country is still recovering from the Covid-19 pandemic shock and with limited room for maneuver. These adverse developments have contributed to slowing economic growth, accumulation of unpaid bills, a large exchange rate depreciation, and a surge in inflation.
“The IMF team held initial discussions on a comprehensive reform package to restore macroeconomic stability and anchor debt sustainability. The team made progress in assessing the economic situation and identifying policy priorities in the near term. The discussions focused on improving fiscal balances in a sustainable way while protecting the vulnerable and poor; ensuring credibility of the monetary policy and exchange rate regimes; preserving financial sector stability; and designing reforms to enhance growth, create jobs, and strengthen governance.
“IMF staff will continue to monitor the economic and social situation closely and engage in the coming weeks with the authorities on the formulation of their Enhanced Domestic Program that could be supported by an IMF arrangement and with broad stakeholders’ consultation
“We reaffirm our commitment to support Ghana at this difficult time, consistent with the IMF’s policies.
“Staff express their gratitude to the authorities, civil society, and development partners for their constructive engagement and support during the mission.”
A staff mission from the IMF was due to conclude its first visit to Ghana on Wednesday.
A mid-term budget review scheduled for Wednesday was postponed to an unspecified date due to the IMF talks, a finance ministry spokeswoman said.
The government has blamed its woes on a combination of external forces including COVID-19, the war in Ukraine, and American and Chinese economic downturns.
Mr Sdralevich expressed commitment “to support Ghana at this difficult time, consistent with the IMF’s policies”.
