The African Center for Energy Policy (ACEP) has called for public and expert suggestions on optimizing the use of future financial gains like the IMF’s Special Drawing Rights (SDR) allocations to bolster Ghana’s economic strategy.
This call comes in response to perceived shortcomings in the use of funds provided by the International Monetary Fund (IMF) during the COVID-19 economic crisis.
In 2021, Ghana received about US$1 billion in SDRs, intended to stabilize the economy.
However, ACEP’s research indicates that the expected economic stabilization has not materialized.
“The funds were meant to provide substantial fiscal support and enhance economic stability, yet our initial analysis indicated a worsening macroeconomic situation in Ghana,” stated Maybel Acquaye, Head of Monitoring and Evaluation and Senior Policy Analyst at ACEP, during a media engagement.
Despite the allocation, economic indicators have deteriorated, with the Cedi depreciating by 30% against the dollar in 2022, and inflation skyrocketing from 7.5% in May 2021 to 54.1% by December 2022. Additionally, the fiscal deficit expanded to 9.9% of GDP, significantly off the 6.7% target.
“While there was a reduction in the debt-to-GDP ratio, the balance of payments deficit widened alarmingly,” Maybel Acquaye added, stressing on the shift to a US$3.6 billion shortfall.
The country also faced several credit downgrades and grew closer to potential default, restricting access to the international capital markets.
The Policy Analyst cited a lack of a coherent medium-term fiscal strategy, delayed debt restructuring, and inflexible economic policies as primary contributors to the downturn.
She emphasized the need for inclusive planning and expert advice to prevent future fiscal mismanagement.
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