IMF lowers Ghana deficit target to 7.3%

The International Monetary Fund (IMF) expects Ghana’s economy to register a lower deficit for 2023 than it initially projected.

The fund lowered the country’s fiscal deficit target to 7.3 per cent this April after projecting that it would end the year at 8.6 per cent in October.

The IMF’s target is also lower than the government’s projection, which was pegged at 9.9 per cent in the 2023 Budget Statement.

The latest fiscal deficit target from the fund was contained in the April 2023 edition of its Fiscal Monitor – a biannual publication from the IMF Fiscal Affairs Department.

The report was launched Wednesday, April 12 at the ongoing IMF/World Bank Spring Meetings in Washington D.C.

The healthier than thought deficit target for Ghana is largely a reflection of the fiscal space created from the suspension of interest payments on external debts in December last year and the conclusion of the domestic debt exchange programme (DDEP) in February 2023.

Ghana concluded the restructuring of its local debt in February as condition precedent to securing final approval for a $3 billion bailout request.

The DDEP led to the swapping of about GH¢83 billion of short-dated bonds that had an average coupon rate of 19 per cent for long-dated ones with yields averaging nine per cent.

The exercise reduced interest payments, resulting in lower-ban-budgeted expenditures, hence the latest lower deficit projection.

The fund also lowered the deficit target for 2024 to 8.4 per cent from 8.9 per cent in October.

It, however, revised the deficits for 2020, 2021 and 2022 upwards to 17.4 per cent, 12.1 per cent and 9.9 per cent respectively.

The October 2022 edition had pegged the deficits at 15.3 per cent, 11.4 per cent and 9.2 per cent for 2020, 2021 and 2022 respectively.