The International Monetary Fund, IMF in a statement after a team led by Carlo Sdralevich paid an official visit to Ghana says the country has effectively managed the COVID-19 pandemic.
The team had discussions with Vice President, Dr. Mahamudu Bawumia, Finance Minister, Ken Ofori-Atta, Governor of the Bank of Ghana, Ernest Addison, other senior government officials, the Finance Committee of Parliament, private sector representatives, and civil society organizations.â€
The visit was from April 28 to May 12, 2021.
Head of the mission, Carlo Sdralevich, in a statement after the visit, said: â€œGhana has managed very effectively the COVID-19 outbreak in the country, and thus succeeded in protecting lives. Almost 93,000 cases have been confirmed, and unfortunately, 780 people have died as of today. The launch of mass vaccine rollout has been a breakthrough, with the administration of approximately a million doses as of end-Mayâ€.
The IMF team noted that despite the economic challenges caused by the pandemic, the several policies put in place by the government are helping the Ghanaian economy to rebound.
Despite the economy growing steadily, the team advised that deeper, and more equitable, fiscal efforts are needed to address the debt vulnerabilities exacerbated by the pandemic.
â€œThe 2021 budgetâ€™s recent policy pivot towards fiscal consolidation is an important step in the right direction and a difficult one in a pandemic. Fiscal consolidation should be deepened and anchored around debt and debt service reduction to create space for social, health, and development spending.â€
Below is the full statement from the IMF:
An International Monetary Fund (IMF) mission led by Carlo Sdralevich held consultations under the Article IV during April 28 â€“ May 12, 2021 through virtual meetings. At the conclusion of the mission, Mr. Sdralevich issued the following statement:
â€œGhana has managed very effectively the COVID-19 outbreak in the country, and thus succeeded in protecting lives. Almost 93,000 cases have been confirmed, and unfortunately 780 people have died as of today. The launch of mass vaccine rollout has been a breakthrough, with the administration of approximatively a million doses as of end-May.
â€œThe impact of the pandemic on the economy has been severe. Real GDP growth slowed to 0.4 percent in 2020 from 6.5 percent in 2019, due to lower activity in the extractive industries and a collapse in hospitality and retail services, including the informal sector that especially employs female workers. Inflation spiked to double digit because of food price pressures, before falling to 8.5 percent in April 2021.
â€œPolicy interventions in 2020 were also critical to safeguard livelihoods and paved the way for a faster rebound of economic activity. Real GDP growth is projected at 4.8 percent in 2021, driven by a rebound in mining and services. Inflation is expected to remain around the central bankâ€™s target of 8 percent by end-2021. The CARES program has the potential to be transformative and inclusive for the Ghanaian economy, buttressed by its emphasis on SMEs and digitalization as well as leveraging the AfCFTA.
â€œGovernment interventions in 2020 also exacerbated pre-existing fiscal rigidities and public debt vulnerabilities. The government deficit, including energy and financial sector costs, reached 15.5 percent of GDP, while annual gross financing needs exceeded 20 percent of GDP. Public debt rose to 78 percent of GDP in 2020, from 64.4 percent in 2019, including ESLA of GHs7.63 billion in 2020.
â€œThe 2021 budgetâ€™s recent policy pivot towards fiscal consolidation is an important step in the right direction and a difficult one in a pandemic. Fiscal consolidation should be deepened and anchored around debt and debt service reduction to create space for social, health, and development spending.
â€œGiven the social and equity implications, fiscal consolidation should rely more on progressive revenue and spending measures, while guaranteeing fiscal support to the most vulnerable and social safety nets.
â€œDespite progress in rationalizing power generation, the financial viability of the energy sector affects peopleâ€™s daily life and will remain a drag on productivity and a driver of public debt if not addressed decisively. Improving efficiency and collections remains a priority to achieve substantial savings.
â€œThe planned audits of COVID-19 emergency spending and of arrears accumulated in 2020â€”in addition to routine budgetary reporting practicesâ€”are welcome as they will help account for the increase of spending and its effectiveness, and provide lessons to improve the robustness of Public Financial Management systems.
â€œThe team had collaborative and constructive discussions with Vice President Bawumia, Finance Minister Ofori-Atta, Governor Addison of the Bank of Ghana, other senior government officials, Finance Committee of Parliament, private sector representatives, and civil society organizations.â€