Ghana’s Commitment to Fiscal Consolidation in Alignment with IMF Program

Fitch Solutions reports that Ghana will continue its fiscal consolidation within the IMF program, citing the unlikely withdrawal from the arrangement. Despite efforts to stabilize the economy, public resistance to fiscal measures is anticipated due to lingering inflation and increased financial burdens on households.

Fitch Solutions, a UK-based research firm, has reported that Ghana is likely to persist in its fiscal consolidation efforts aligned with the International Monetary Fund (IMF) program. The firm asserts that the probability of Ghana withdrawing from the IMF program is low, particularly after failed renegotiation attempts, as the nation critically depends on IMF support for its external stability.

IMF funding is essential for Ghana’s foreign exchange liquidity and helps maintain investor confidence in the nation’s economic management, thus contributing significantly to macroeconomic stability. This indicates that adherence to the IMF program is a priority for the Ghanaian government.

Despite anticipated fiscal tightening, which is poised to stabilize the economy, Fitch Solutions anticipates possible public resistance. Inflation, although reduced from a high of 53.6% in January 2023 to 23.5% in January 2025, continues to exceed the ten-year pre-pandemic average of 12.1%. Consequently, reduced government spending coupled with increased taxes may strain household finances, stirring public discontent.

Fitch Solutions comments that this situation will likely maintain protest activity at high historical levels. However, it suggests that such demonstrations will remain localized and short-lived, presenting minimal risks to commercial operations.

In summary, Ghana’s adherence to the IMF program is projected to enhance economic stability through fiscal consolidation, despite impending challenges such as public resistance due to the financial strain placed on households. Maintaining IMF funding is crucial for bolstering investor confidence and ensuring macroeconomic stability, even as households grapple with the effects of tighter fiscal measures.

Original Source: www.ghanaweb.com