By: Mr. Dauda Iddrisu| 28th October 2025
In a recent interaction with the IMF’s Director of the African Department, Abebe Selassie, on the sidelines of the IMF/World Bank Annual Meetings in Washington, the governor of the Bank of Ghana, Dr. Johnson P. Asiama, suggested that Ghana will be ready to exit the fund’s facility come next year. The intent of this write up is to highlight some of the reasons that took Ghana to the IMF in the first place.
In May 2023, Ghana entered into a three-year, US $3 billion Extended Credit Facility (ECF) arrangement with the International Monetary Fund (IMF). This marked the seventeenth time the country had sought IMF assistance since independence. The decision came at a critical moment for the Ghanaian economy, which was facing severe fiscal and external imbalances. Several interrelated factors compelled the then Akufo Addo government to turn to the IMF for the support.
1. Mounting Economic Pressures and External Shocks
Ghana’s economy had been grappling with a series of external shocks and long-standing structural weaknesses. The combined effects of the COVID-19 pandemic, rising global commodity prices, and the Russia-Ukraine war exerted tremendous pressure on public finances and the balance of payments.
At the same time, Ghana entered this period with pre-existing vulnerabilities (high fiscal deficits, rising debt levels, and a heavy reliance on external borrowing). These weaknesses left the economy exposed when global conditions worsened. The result was a sharp depreciation of the Ghanaian cedi, surging inflation, dwindling foreign exchange reserves, and loss of access to international capital markets.
By late 2022, the situation had deteriorated into an acute macroeconomic crisis, prompting the Akufo-Addo/Bawumia government to seek IMF assistance as a stabilising anchor.
2. Restoring Macroeconomic Stability and Debt Sustainability
A key reason for Ghana’s engagement with the IMF was the need to restore macroeconomic stability and ensure debt sustainability. The IMF-supported programme aimed to help the government implement strong policy reforms to reduce fiscal imbalances, rebuild reserves, and stabilise the exchange rate.
The ECF arrangement sought to anchor Ghana’s own Post-COVID-19 Programme for Economic Growth (PC-PEG). It provided not only financial resources but also a credible policy framework to rebuild confidence among investors, development partners, and credit rating agencies.
3. Addressing an Unsustainable Debt Burden
By 2022, Ghana’s public debt had reached unsustainable levels, with debt-service costs consuming a significant portion of government revenue. The country was unable to meet its external financing obligations, leading to the suspension of some debt payments.
The IMF programme therefore became a key part of Ghana’s debt restructuring agenda, which included both domestic and external debt. The goal was to bring the debt trajectory back to a sustainable path and create fiscal space for social and developmental spending.
4. Implementing a Comprehensive Reform Agenda
The IMF programme went beyond short-term financing. It also outlined a broad set of structural and fiscal reforms designed to strengthen the foundations of the Ghanaian economy.
These included:
I) Fiscal consolidation through enhanced domestic revenue mobilisation (notably through tax reforms) and rationalisation of public expenditure.
II) Monetary and exchange rate policies aimed at reducing inflation and stabilising the cedi.
III) Public financial management reforms, including better oversight of state-owned enterprises and control of contingent liabilities.
IV) Reforms in key sectors such as energy and cocoa to improve efficiency and reduce fiscal risks.
The IMF described these measures as “large and frontloaded,” underscoring the urgency of restoring balance and credibility to Ghana’s economic management.
5. Rebuilding Confidence and Access to Financing
Finally, Ghana’s decision to subscribe to the IMF facility was also strategic. By partnering with the IMF, the government aimed to regain international credibility, unlock additional donor and bilateral support, and restore investor confidence. The IMF programme served as a signal of policy discipline and commitment to reform, helping to catalyse further financial inflows from development partners.
Conclusion
Ghana’s 2023 subscription to the IMF facility was both a response to crisis and a step toward economic renewal. Faced with severe fiscal stress, rising debt, and collapsing investor confidence, the government sought IMF support to stabilise the economy, restore debt sustainability, and implement wide-ranging reforms.
The US $3 billion ECF programme represents not only financial relief but also an opportunity for Ghana to reset its economic policies, strengthen resilience, and lay the groundwork for sustainable, inclusive growth in the years ahead.
Sources: IMF, Ministry of Finance, JoyNews
The writer holds a BA. in Economics and an MCom. in Banking and Finance and is currently an Economics Tutor in Wa Senior High School.
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