Minister for Finance, Dr. Mohammed Amin Adam disclosed that Ghana’s Gross Domestic Product (GDP) grew by 2.9 percent in 2023.
This surpassed the World Bank’s projected 1.5% and the revised projection of 2.3% for the year under review.
“Growth turned out to be more resilient and robust in 2023 than initially programmed as GDP grew by 2.9% compared to the original projection of 1.5% and the revised projection of 2.3%. We expect growth to continue its upward trajectory to average 5% in the medium term as we implement our growth strategy under the PC-PEG, supported by the revival of Ghana’s industrialization drive, modernization of agriculture with a focus on value-addition to create economic and employment opportunities, and SME growth and financing.”
He also disclosed that the country’s international reserves are improving with $6.2 billion.
“Gross International Reserves (GIR) is improving and now stands at $6.2 billion covering 2.7 months of import cover at the end of February 2024 compared to $5.9 billion in the corresponding period of 2022.
“GIR is expected to improve to cover at least 4.4 months of import cover in the medium-term to be supported by external inflows from the IMF and World Bank, the government’s Gold-for-Oil Programme, the BoG’s Gold for Reserves programme, as well as the Cocoa Syndicated Funds.”
He has also declared a positive picture of Ghana’s economic trajectory, and highlighted significant progress and promising indicators for the medium term.
Providing an update on the economy at the Ministry of Finances Monthly Economic Update on Friday, May 24, 2024, Dr. Amin Adam emphasized the resilience of the economy and the effectiveness of ongoing reforms stressing that all the economic indicators point to a rebound earlier than expected.
He said: “We’re making remarkable progress towards restoration of macroeconomic stability and economic recovery, however, we are not out of the woods yet. In spite of emerging fiscal pressures, we are determined to hold the line to ensure that we meet our fiscal targets for the year. We will not hesitate to adjust expenditures accordingly in the event that our revenues fall short of target.”
The minister pointed to a series of achievements and improvements across various economic metrics, attributing them to the government’s commitment to structural reforms and prudent fiscal management.
One of the key areas of success highlighted by the Finance Minister was the implementation of the IMF-Supported Post-COVID-19 Programme for Economic Growth (PC-PEG).
Following a successful 2nd Review Mission by the IMF, Ghana secured a Staff Level Agreement (SLA), paving the way for the disbursement of additional funds.
“The positive results of the first and second reviews of the implementation of the IMF-supported Programme testify that we are achieving the Programme’s objective of restoring macroeconomic stability and debt sustainability,” Dr Amin Adam affirmed.
In terms of economic growth, Dr. Amin Adam noted that Ghana had exceeded expectations, with GDP growing by 2.9% in 2023 compared to the original projection of 1.5%. He expressed confidence in the country’s ability to sustain this momentum, projecting an average growth rate of 5% in the medium term. This growth, he explained, would be supported by initiatives such as the revival of Ghana’s industrialization drive, modernization of agriculture, and support for SME growth and financing.
Inflation
The Finance Minister highlighted a significant decline from 54.1% at the end of 2022 to 25.8% in March 2024. He attributed this positive trend to fiscal consolidation efforts, tight monetary policy, exchange rate stability, and improved food production. Dr Amin Adam expressed optimism that inflation would return to the target band of 8.2 percent by 2025.
In addition to improvements in economic growth and inflation, Dr. Amin Adam highlighted positive developments in other areas. He said Gross International Reserves (GIR) improved to US$6.2 billion, covering 2.7 months of import cover by February 2024 noting the significant progress in stabilizing the exchange rate, with the depreciation of the cedi against the US Dollar halving from 54.2% at the end of November 2022 to 27.8% at the end of December 2023.
He acknowledged recent pressures on the exchange rate but remained confident in the government’s ability to address them. He outlined measures being taken to stabilize the cedi, including fiscal consolidation, intensification of the gold-for-oil and gold-for-reserves programs, and appropriate foreign exchange interventions by the Bank of Ghana.
Cedi
He also indicated that the Cedi has cumulatively depreciated by 14.2% in 2024 and it has largely stabilised from November 2022 to December 2023 and continues to experience a fair appreciation against the Dollar in 2024.
He also said the Cedi is expected to be strengthened in the medium term after the completion of the domestic debt exchange programme.
“But for recent pressures we are seeing on exchange rate movements, the exchange rate has been largely stabilised with the depreciation of the cedi against the US Dollar halving from 54.2% at the end of Nov 2022 to 27.8% at the end of Dec 2023.
“The Cedi’s stability has continued into 2024, with a cumulative depreciation of 14.2% as of 20th May 2024, compared to 20.7% recorded in the same period in 2023. We expect the cedi’s stability to improve into the medium-term as we complete debt restructuring, make more progress on fiscal consolidation, and improve our reserves over the medium-term.”
He further addressed the current pressures in the Cedi which he attributed to the “strengthening of the US Dollar against major trading currencies”
“The recent pressures we are observing on the cedi is largely on the back of the strengthening of the US Dollar against major trading currencies, seasonal forex demand including elevated demand from corporate institutions, payment to contractors and to IPPs, high Cedi liquidity and speculation.”
In all, the Minister said “we are expecting a total disbursement of about USD 2.32 billion before the end of the year to add to the significant foreign exchange reserve already built up by the Bank of Ghana”, he noted.