Ghana completes fourth review of IMF reform program and confirms recovery path

Adamu Issah
Accra, Ghana
September 19, 2025

G hana and the IMF signed a reform package or Extended Credit Facility arrangement (ECF) on May 17th, 2023. The ECF is a three-year US$3 billion reform package. On April 15th, 2025, the IMF staff and the Ghanaian authorities reached a staff-level agreement on the fourth review of this program. With the subsequent approval of this fourth review, Ghana secured access to US$370 million, bringing the total IMF disbursement under the ECF arrangement to US$2,355 million since May 2023. The IMF expects Ghana to exit the reform program in 2026.Ghana’s recovery is on track according to the review. The IMF says that from 2024 to the third quarter of 2025 growth was higher than expected, reflecting robust activity in the mining, agricultural, ICT, manufacturing, and construction sectors. The external sector also recorded considerable improvement, driven by solid exports, particularly gold hydrocarbon, higher remittances. As a result, the accumulation of international reserves has exceeded the ECF initial targets. Another performance benchmark is inflation, which is recording notable improvement. It has halved, standing at 11.5 percent, from 23 percent during the same period in 2024.

Performance under the ECF

Before the review, the government of Ghana has been highlighting the country’s economic performance since 2024 and during the first three quarters of 2025. In a nutshell, real GDP growth rose from 3.1 percent to 6.3 percent in the third quarter of 2025. The country has also recorded continued dis-inflationary trend as the budget deficit (Commitment basis) stabilizes at 4.2 percent of the GDP. Primary balance surplus (Commitment basis) stayed at 0.5 percent of the GDP. Finally, the gross international reserves (GIR) has increased to cover 3.0 months of imports.

Reports from the International Monetary Fund (IMF) show that three economic sectors spurred Ghana’s economic growth in 2024 and during the first semester of 2025. They include extractives (mining, oil, and gas), real estate infrastructure and finance and banking (through high remittance and foreign earnings from external trade). Together, these three economic sectors boosted international reserves beyond the ECF’s program targets¹.

Despite this performance, the IMF noted slippages and delays in aspects of reforms and policy actions in this run up to presidential elections at the end of the 4th Quarter of 2024. However, the IMF has confirmed that government has adopted strong corrective measures to address these slippages and ensure the fiscal program remains on track.

‟The economy is still fragile and remains in distress”².

The ministry of finance was upbeat about the country’s short-term progress, despite cautions about arrears and public debt, Cedi volatility and interest rate. In his budget speech, he acknowledged that five important areas contribute to the vulnerability of the economy.

Public debt

In June 2023, Ghana's public debt represented US$51.67 billion of 71.1 percent of gross domestic product (GDP). Extenal debt represented 40.3 percent of GDP, standing at US$22.4 billion ( GH₵322.56 billion) while domestic debt represented 30.8 percent of GDP with a total of US$22.4 billion (GH₵246.79 billion). At end-July 2025, the total public debt stood at 44.9 percent of GDP down from 61.8 percent of GDP at end December 2024.

Despite these positive developments, public debt and specifically domestic arrears and payables remain a major hurdle on the way to full economic recovery. In December 2024, during his presentation of budget at the Ghana Parliament, Minister of Finance, Cassiel Ato Forson explained that total central government arrears or payables amounted to US$6.489 billion (GH¢67.5 billion) representing 5.7 percent of GDP. Over the next four years, the country will pay about US$14.4 billion (GH¢150.3 billion), representing 11.6 percent of GDP in domestic debt service obligation. In this amount, 73.3 percent will have to be paid in 2027 and 2028, representing US$5.5 billion (GH¢57.6 billion) and US$5.0 billion (GH¢52.5 billion). On the other hand, Ghana also faces external debt service obligation over the next four years totaling US$8.7 billion, representing 10.9 percent of GDP, with heavy concentration in 2027 and 2028. These commitments will fall due when the treasury bill market has become the Government’s unique options to financing the budget.

‟The debt service obligations of 2027 and 2028 are major humps. These humps are cancerous and pose significant risk to the economy but we shall fix it! ”, the Minister told parlamentarians.

The country must also tackle fiscal risks and extra budget spending. In 2024, the government spent US$1.5 billion (GH¢20.8 billion) to fill the energy sector financing shortfalls. The recurrent and persistent shortfalls have become an important source of fiscal risks that permeates the entire electricity supply and value chain. For example, the aging network is incurring distribution (system) losses and high generation cost. Also, the lack of competition and limited renewable capacity in the generation mix, plus the non-cost reflective tariffs, are exacerbating payment gaps between stakeholders and service providers. The government introduced a new system to achieve an even distribution of revenues between independent power producers (IPPs), State-owned enterprises and regulators. But over the past decade, even the injection of large subsidies has not cleared unpaid arrears.

Cocoa sector: lingering crisis

Despite its importance to the economy of Ghana, the cocoa sector is another major source of fiscal risk. Over the past decade, cocoa has generated on average US$1 billion of export revenue every year. But, production continues to decline, with a cumulative drop of 50 percent over the past three years, as world prices rose. Data on the cocoa crops, from public debt reports, present a catalogue of falling production and hanging debt from roll-over contracts. Expenses have spiraled out of control. For example, quasi-fiscal expenditures, including cocoa roads currently account for 66.8 percent of total COCOBOD debt. COCOBOD’s outstanding debt amounts to US$3.12 billion (GH¢32.5 billion), of which US$932 million (GH¢9.7 billion) is due to be paid at the end of September 2025.

At the end of the 2023-2024 crop season, the COCOBOD did not supply 330 thousand tons of cocoa contracts to its customers inside and outside of the country. The State-owned cocoa company had to roll this forward obligation over for subsequent supply and payment in the following years. These existing forward sales contracts are still locked in lower prices. This means that Ghana missed out on potential earning from rising global prices, which translated into revenue losses of US$840 million for both COCOBOD and Ghanaian farmers. The government estimates that for every ton of cocoa delivered this year in fulfilment of the rolled-over contracts, COCOBOD, and the Ghanaian farmer will lose US$4,000 in revenue.

However, according the IMF expects the COCOBOD to honor the contracts rolled over from the previous year and those that originated in the current season, except for a small share already agreed on with buyers. The Fund also indicated that COCOBOD new financing model—which reduces reliance on syndicated loans, in favor of other trade financing options, appears to have reduced liquidity constraints, delivering faster payments to the farmers.

The government and stakeholders of the cocoa business agree that the sub-sector needs a modern economic model, which capitalizes on domestic transformation. An emerging domestic chocolate-consuming youth, rising demand from neighboring West African countries and the emergence of AfCFTA offer Ghana an opportunity to develop an ambitious domestic cocoa value chain that will reduce the chronic detrimental reliance on export. For decades, the cocoa sub-sector has fostered an incongruous economic paradox wherein the country confines herself to the export raw cocoa while importing high value and expensive finished products. Over the years, cocoa export has provided short-term gains but entrenched long-term dependence, reliance on external financings and risky exposure to changes in regulations in destination countries. In addition to a radical reversal of this deterministic trade structure, Ghana needs bold actions to address other rising challenges. These include specific and sustained climate adaptation and mitigation measures targeting the cocoa community.

Financial sector: resilience and debt restructuring legacy

The 2022 domestic debt exchange program (DDEP) exerted a negative impact on the balance sheet of the financial sector, prompting the Government to establish the Ghana Financial Stability Fund (GFSF). Its goal is to mitigate the impact of the DDEP on financial institutions through the provision of solvency and liquidity cushions. Under the IMF program, the fund started operation with an endowment of US$1.5 billion (GH¢22.8 billion). Another DDEP relief initiative from the World Bank also provided US$250 million loan facility to beef up the solvency of banks and other financial institutions. The government has disbursed a part of these funds to eleven (11) financial institutions, including four (4) banks, four (4) capital market operators and three (3) insurers. Despite this injection of money and recapitalization, the sector continues to face challenges. The government estimates that at least one bank, the National Investment Bank, needs to address potential systemic ‟ fiscal risk ”.

The Ghana Banking Association (GBA) has warned that ‟the government’s reliance on domestic financing has direct consequences for Ghana’s banking sector”. This is because banks continue to hold a portion of restructured bonds. Lapses in government debt servicing, GBA says, will destabilize the sector and reduce private sector lending³.

Cedi: Form world’s ‟Best” to ‟Worst” currency in one month

On June 4th 2025, the Ghana Cedi was the ‟world-best performing currency” according to data from Bloomberg for the second quarter of 2025. With this appreciation, Ghana’s inflation rate dropped to the lowest level in more than three years, as the Cedi drove down the cost of imports . By early September 2025 (third quarter) the Ghana Cedi had collapsed, earning the new unflattering title of ‟worst-performing currency” after relinquishing gains it made from the previous quarter.

Until then, the Cedi was on an improvement trajectory. Back in 2024, the Ghanaian Cedi had depreciated consistently against the US dollar, British pound, and the Euro. The Cedi began appreciating in December 2024 and held on over the first quarter of 2025. In May 20th, 2025, the cedi had appreciated by 21.5 percent year-to-date, posting a gradual reversal from the 19.2 percent depreciation recorded in 2024. The government explained that a strong remittances inflow, an increase in foreign exchange reserve and a strong export of gold, minerals and oil contributed to the Cedi’s appreciation. In line with this development, the Bank of Ghana cut its main policy interest rate down to 25 percent, citing the strength of Ghana’s economic ‟domestic fundamentals”.

A fall of the Cedi, in relation to major trading currencies, has both positive and negative effects on the economy. Specifically, consumers will lose out because the price of imported goods will rise, but exporters will see an increase in competitiveness. In an economy that is recovering from a downturn and an overvalued exchange rate, a currency depreciation can help the economy recover and help unemployment to fall.

In addition to this impact on inflation (purchasing power), the volatility of the Cedi will influence public debt. Rating agency Fitch forecasts that a large appreciation of the Cedi will contribute to public debt falling to 60 percent of GDP at the end of fiscal year 2026. This represents a drop from 72 percent in 2024 from a peak of 93 percent in 2022, when Ghana announced its intention to default ⁴.

Interest rates

On July 30th 2025, the Bank of Ghana's (BoG) Monetary Policy Committee (MPC) lowered the policy rate from 28 percent to 25 percent, a significant 300 basis point. On September 17, 2025, the Bank surprised the markets with another 350 basis point cut, bringing down interest to 21.5 percent. Continued disinflation, a robust GDP growth and a strengthening external sector motivated their decision to cut rate. Ghana’s economy grew by 6.3 percent year-on-year in the second quarter of 2025 (up from 5.7 percent during the same period in 2024). At the same time headline inflation fell for the eight consecutive month to 11.5 percent.

Monetary policy refers to the decisions the Bank of Ghana makes about increasing or decreasing the money supply to stimulate or slow down the economy. Ghana has a floating interest rates which, the central bank expects will reflect actual level of economic activities. However, rate movements in other countries affect Ghana through its debt obligations and trade.

Ghana is a modern open economy. As in other peer countries, a confluent of factors determines interest rates but in its most simplistic mechanics, cheaper money, in the form of lower interest rates, will stimulate economic activity (other things being equal) while dearer money (higher interest rates) will restrict economic activities. Through monetary policy, the Bank of Ghana seeks to achieve its inflation targets (plus or minus 8 percent). Another objective is the stabilization of the financial system and the reduction of unemployment. Achieving these macroeconomic goals is not without unintended consequences. For example, a cut in interest rates might cause the Cedi to decline. Interest cut makes exports cheaper and imports more expensive. These cuts can also import inflation and worsen the trade balance. Finally, as a pillar of the country’s financial system, the Bank of Ghana most also maintain its stability by ensuring that banks and financial institution meet and comply with regulatory standards.

Outlook

International rating agencies Moody’s and Fitch have upgraded Ghana’s rating, citing gradual fiscal strength since 2024. In April 2025, Moody’s lifted Ghana from ‟Ca stable” (or ‟highly speculative or near default”) to ‟Caa2 positive”. However, according to Moody’s, Ghana’s obligations remain in ‟poor standing and are subject to high credit risk”. On June 16th 2025, Fitch upgraded Ghana’s ‟Restricted Default” (RD) ‟Long-Term Foreign-Currency Issuer Default Rating (IDR)” to ‟B minus” to signal an improvement in macroeconomic data. In Fitch’s rating scale, ‟B” rating means that default risk is present, but with a limited margin of safety remains. This means that Ghana will continue to meet its financial commitments. But, according to Fitch, ‟capacity for continued payment is vulnerable to deterioration in the business and economic environment”⁵.

Despite the warnings, the IMF is also optimistic after the fourth review of the ECF. It concedes that Ghana continues to ‟keep the structural reform agenda on track” despite slippages during the last quarter of 2024⁶. The government of Ghana remains focused on meeting the IMF-program targets and on restoring Ghana’s creditworthiness. Nevertheless, the Fund acknowledges that that the current global tariffs war is upsetting the international economic environment and has the potential to affect Ghana. On the other hand, IMF thinks that the 10 percent U.S.-imposed tariff will have minimal impact on Ghana in the short-run because Ghana has limited exposure to US market. Indeed, Ghana’s exports to the US are dominated by crude oil and commodities such as cocoa and gold, unlike Europe where Ghana has exports a diverse portfolio of items to a diverse destination. The IMF expects Ghana to accelerate reform to improve revenue mobilization and expenditure rationalization—while protecting the vulnerable from the impact of policy adjustment. Ghanaian authorities and the Fund agree that public financial management reforms should align with spending with revenues.

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