As Ghana exits the IMF programme in December, what can citizens expect?

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As we complete and exit the programme in December 2018, we are also instituting measures to ensure irreversibility of the macroeconomic gains we have made. Consequently, we will, among others:

  • legislate a fiscal responsibility rule to cap the fiscal deficit to no more than 5% of GDP as part of measures to promote budget credibility and fiscal sustainability;
  • strictly enforce the PFM Act to promote efficient and effective public financial management;
  • continue with the zero central bank financing arrangement with the BoG to curb fiscal dominance as part of measures to rein in on inflation;
  • maximize domestic resource mobilization and increase Tax Revenue-to-GDP ratio to levels in line with our peer Lower Middle-Income countries;
  • implement expenditure efficiency and rationalization measures to increase efficiency in public spending and free more fiscal space for growth oriented and job-creating programmes;
  • enforce the Public Procurement Act and ensure sole sourcing is minimized to promote competition and efficiency in public spending, thereby, promoting value for money; and
  • institute risk management framework to mitigate macro fiscal risks. In view of this, a Fiscal Risks Unit has been established at the Ministry of Finance.

God has demonstrated countless times that He can use ordinary people, ordinary nations in ordinary times to do extraordinary things. Ghana has a history replete with “extraordinary” achievements – nationally, regionally and internationally. These achievements were the result and culmination of right choices.

Mr. Speaker, having set the tone for this budget, in accordance with the Public Financial Management Act, I will proceed to provide details of Government’s plans for 2019, focusing on:

  • Recent global macroeconomic developments, and their implications for Ghana;
  • Ghana’s macroeconomic performance in 2018, and our targets for 2019 and the medium term; and
  • Sectoral performance, Government’s key programmes and policy initiatives, and the consequent deliverables.

Section Two: Global Economic Developments and Outlook Growth

Mr. Speaker, according to the IMF’s October 2018 World Economic Outlook (WEO), global growth momentum moderated in the first half of 2018, compared to the same period in 2017. This reflected greater than expected moderation of activity in some advanced economies, particularly, in the euro area and United Kingdom. Global growth is projected to be maintained at 3.7 percent in 2018 and 2019, same as in 2017.

Growth in advanced economies expected to increase very marginally from 2.3 percent in 2017 to 2.4 percent in 2018, largely on the back of strong growth in the US economy, which benefited from sizable fiscal stimulus. Growth in emerging markets and developing economies was steady in the first half of 2018, supported by continued stronger growth in emerging Asia, despite the moderation of activity in China. Growth in the emerging markets and developing economies is projected to remain steady at 4.7 percent in 2019, same as in 2018 and 2017. In sub-Saharan Africa, growth is expected to increase from 2.7 percent in 2017 to 3.1 percent in 2018, and further to 3.8 percent in 2019, boosted by oil-exporting economies which benefited from higher oil prices.


Mr. Speaker, global inflation increased in the second quarter of 2018, largely reflecting higher energy prices. Core inflation, excluding food and energy, remains below target in most advanced economies while in emerging markets and developing economies, core inflation has inched up in recent months. Commodity Prices

Mr. Speaker, commodity prices generally continued to strengthen in the third quarter of 2018; oil prices increased to about US$76 a barrel in the first half of 2018, the highest since November 2014, but declined to about US$71 in October 2018, following increased oil production by the major exporters.

Mr. Speaker, the world market price of cocoa beans is estimated to reach US$2,200 per metric tonne in 2018 compared to US$2,025 in 2017. Gold prices are also projected to increase from US$1,293/toz in 2017 to an average of US$1,3460/toz in 2018 before falling slightly to US$1,302/toz in 2019.

Financial conditions

Mr. Speaker, the monetary policy normalisation in the US led to a stronger US dollar and rising yields on US treasuries, resulting in tighter financing conditions and capital flow reversals in a number of emerging markets and frontier economies, including Ghana. Despite these developments, global financial conditions remain generally supportive of growth.


Mr. Speaker, the performance of the economy for the first nine months has been impressive. To properly assess this performance, let me first re-state the macroeconomic targets set for 2018 as presented in the 2018 Budget:

  • Overall Real GDP growth rate of 6.8 percent (5.6 % in the rebased series);
  • Non-Oil Real GDP growth rate of 5.4 percent (5.8 % in the rebased series);
  • End-period inflation of 8.9 percent;
  • Fiscal deficit of 4.5 percent of GDP (3.7 % in the rebased series);
  • Primary surplus of 1.7 percent of GDP (1.4 % in the

rebased series); and

  • Gross International Reserves to cover not less than 3.5 months of imports of goods and services.

Mr. Speaker, data as at the end September 2018 shows that, the economy is in good shape and we are on track to meet our targets:

  • Real GDP grew by 5.4 percent (using rebased series) in the first half of 2018 compared to the annual target of 5.6 percent. Non-oil real GDP grew by 4.6 percent compared to the 2018 target of 5.8 percent;
  • End-period inflation rate declined from 11.8 percent at the end of 2017 to 9.8 percent at the end of September 2018; and further to 9.5 percent as at October 2018;
  • The fiscal deficit was 3.0 percent of rebased GDP at the end of September 2018 compared to a target of 2.7 percent;
  • The primary balance was a surplus of 0.5 percent of rebased GDP compared to a target of 0.9 percent of rebased GDP for the period;
  • The public debt including the financial sector bailout costs at the end of September 2018 was 57.4 percent of rebased GDP. Excluding bailout costs, the debt was 53.9 percent of rebased GDP;
  • The monetary policy rate dropped from 20 percent at the end of 2017 to 17 percent at the end of October 2018;
  • The provisional trade balance for the period recorded a surplus of US$1,617.81 million compared to a surplus of US$777.82 million recorded for the same period in 2017;
  • Gross International Reserves accumulated to US$6,756.43 million sufficient to cover up to 3.6 months of imports, ahead of our 2018 target of 3.5 months;
  • The exchange rate, which appreciated against the US Dollar up to May 2018, depreciated by 7.57 percent at the end of Sept 2018 largely on account of external pressures including the strengthening of the US dollar, the US-China trade war, and the US Fed policy rate hikes. Compared to other emerging economies, Ghana has been able to weather the storm a lot better, primarily due to strong economic fundamentals.

Mr. Speaker, the detailed performance in the real, monetary, external, and fiscal sectors of the economy is provided below.


Mr. Speaker, the 2018 Budget envisaged a 6.8 percent GDP growth rate. However, with the rebasing of the GDP, there has been the need to revise the 2018 growth projection. Thus, the overall GDP growth target has been revised to 5.6 percent, taking account of the base effect of the GDP rebasing and half46 year performance. Non-Oil GDP is projected to grow by 5.8 percent.

Mr. Speaker, provisional estimates by the Ghana Statistical Service show that economic growth remains strong in 2018.

Real GDP grew by 5.4 percent during the first half of 2018. The non-oil economy grew by 4.4 percent and 4.3 percent in the first and second quarters of 2018, respectively.

Monetary Aggregates and Credit Developments

Mr. Speaker, broad money supply, including foreign currency deposits (M2+) grew by 24.1 percent year-on-year at end September 2018 compared with 23.1 percent over the same period in 2017. The pace of expansion in banks’ total outstanding credit increased in the 12-month period to September 2018. Total outstanding credit increased by 13.0 percent (GH¢4.7 billion) compared with 7.9 percent (GH¢2.6 billion) in September 2017. Most of the credit to the private sector was absorbed by the commerce and finance, services, transport and storage, communication, and manufacturing subsectors.

Interest Rates

Mr. Speaker, money market interest rates generally trended downwards in 2018, reflecting the reduction in the monetary policy rate and general improvements in macroeconomic fundamentals. However, the 91-day Treasury bill rate increased to 13.37 percent in September 2018, from 12.8 percent a year ago, while the 1-year note firmed up to 18.0 percent in September 2018. Deposits and lending rates of the Deposit Money Banks also went down generally.

Exchange Rate

Mr. Speaker, the Ghanaian Cedi, came under pressure in the second quarter of 2018, following the strengthening of the US dollar in international markets. These developments resulted in tighter financing conditions and capital flow reversals in a number of emerging markets and frontier economies, including Ghana. Domestic demand pressures for foreign exchange, as well as, speculative trading were also contributory factors. Mr. Speaker, the Cedi, however, stabilised in the third quarter, benefiting from positive sentiments on the market as a result of the cocoa syndicated loan inflow.

International Reserves

Mr. Speaker, these external sector developments resulted in a drawdown of the country’s gross international reserves by US$798.41 million to US$6.8 billion at the end of September 2018. This was sufficient to provide for 3.6 months of imports cover compared with 3.9 months of imports cover as at December 2017.

Fiscal Developments

6Mr. Speaker, our overarching fiscal policy objective over the past two years has been to consolidate our public finances as a surer path to a declining debt burden. With this in mind, the 2018 Budget set the overall fiscal balance as the primary anchor and targeted a reduction in the fiscal deficit from 4.8 percent of rebased GDP (5.9 % of old GDP) in 2017 to 3.7 percent of rebased GDP (4.5 % of old GDP) in 2018. At the same time, the fiscal framework was calibrated to yield a larger primary surplus relative to the 2017 outturn and ultimately lower the rate of debt accumulation.

Mr. Speaker, to safeguard our fiscal policy objectives for 2018, Government presented a package of revenue measures to this august House during the Mid-Year Fiscal Policy Review of the 2018 Budget Statement and Economic Policy. These measures took into consideration, the need; first, to improve the sluggish revenue performance of the first five months of the year and, second, to address the low non-oil tax-to-GDP ratio as compared to peer middle income economies.

Specifically, a) GETFund and NHIL were decoupled from the Input-Output VAT mechanism and converted into straight levies with rates remaining at 2.5 percent each; b) a Luxury Vehicle Levy; and c) an additional Personal Income Tax band of income in excess of GH¢10,000 with 35 percent tax rate.

Mr. Speaker, provisional data on Government’s fiscal operations from January to September 2018, indicates that, domestic revenues grew by 15.9 percent on an annual basis and reached GH¢31.7 billion compared to GH¢27.3 billion during the same period in 2017. However Total Revenue and Grants was 9.5 percent below target. On the other hand, expenditures were generally lower than programmed although some overruns were observed on specific expenditure lines including Use of Goods and Services and Wages and Salaries. These operations resulted in a fiscal deficit of 3.0 percent of rebased GDP compared to a deficit target of 2.6 percent of rebased GDP for the 9 months.

Mr. Speaker, the fiscal deficit was financed from both domestic and external sources and included a drawdown in government deposits with the Bank of Ghana. Total Domestic Financing amounted to GH¢4.2 billion of which net financing from domestic market operations amounted to GH¢6.5 billion. Total Net Foreign Financing amounted to GH¢4.9 billion and included inflows from the issuance of the 2018 Eurobond.

Mr. Speaker, the primary balance recorded a surplus of GH¢1.5 billion, 0.5 percent of rebased GDP, albeit lower than the target of GH¢2.8 billion, 0.9 percent of rebased GDP.