IMF programme will benefit Ghana’s economy, says EIU

The Economic Intelligence Unit (EIU) says an International Monetary Fund (IMF) programme will help the government to prioritise policy independence

The Economist Intelligence Unit ((EIU) has said the country’s economy will benefit immensely from an IMF programme, especially in a bid to reignite investor interest.

In the EIU’s five-year forecast for Ghana released on 13 April 2022, it said: “Ghana would benefit from an IMF programme, given investor concerns about fiscal sustainability due to high debt, but the government will prioritise policy independence.

“In line with the latest exchange-rate data released by the Ghana Statistical Service (the national statistical agency), which show sharper than expected depreciation at the beginning of the year, EIU has revised its exchange-rate forecast for 2022.”

“We now expect the cedi to weaken sharply in the first half of 2022, accelerating the depreciation of the currency against the US dollar on average, to GHC7.35:US$1 in 2022 (previously forecast at GHC6.55:US$1), reflecting Ghana’s structural import dependency,” the EIU stated.

“The spike in global oil prices in the wake of the Russian invasion of Ukraine has led us to revise up our oil price outlook sharply. We expect prices to remain elevated in the near term, further boosting Ghana’s fiscal, inflation and current-account forecasts.”

Fiscal deficit

On the country’s fiscal deficit, the EIU said: “Given higher than previously expected government revenue from oil for the forecast period, we have reduced our fiscal deficit forecast for 2022—to 6.9% of GDP (from 7.2% of GDP previously)—and for 2023-26, to an average of 5.2% of GDP (from 5.4% of GDP).”

It added: “In line with rising oil, food and general commodity prices, alongside heightened logistical disruptions due to the Russia-Ukraine war, we have revised our inflation forecasts for Ghana for 2022. We now expect price growth to average 13.4% (up from 11.1% previously).

“We now forecast that the current-account deficit will average 2.4% of GDP in 2022 (down from a previous forecast of 2.8% of GDP), supported by stronger oil and gold exports; in 2023-26 we expect it to average 3.3% of GDP in 2023-26 (revised down from 3.4% of GDP).”

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