A feature by Othniel Ekow Kwainoe
Accra, June 03 GNA – Ghana’s economic recovery story is rapidly becoming one of the most remarkable macroeconomic stabilisation case studies on the African continent.
What makes Ghana’s recovery, particularly, significant is not simply the fact that the country has exited an International Monetary Fund (IMF)-supported programme, but the speed with which the economy has moved from near-collapse to renewed stability and international credibility.
Barely a few years ago, Ghana faced one of the gravest economic crises in its post-independence history. Inflation was spiralling out of control, the cedi was collapsing under severe pressure, investor confidence had deteriorated sharply, public debt had become unsustainable, and government had effectively lost access to the international capital markets.
The economy was under enormous strain, businesses struggled to survive, and ordinary Ghanaians bore the painful burden of rising prices and declining purchasing power.
At the centre of this crisis was a pattern of fiscal indiscipline, excessive borrowing, weak expenditure controls, and unsustainable election-year spending under the Nana Addo-Dankwa Akufo-Addo administration.
In the IMF’s 2023 country report on Ghana, it notes that large external shocks in recent years have exacerbated Ghana’s pre-existing fiscal and debt vulnerabilities, resulting in a loss of international market access, increasingly constrained domestic financing, and reliance on monetary financing of the government.
Decreasing international reserves, Cedi depreciation, rising inflation and plummeting domestic investor confidence, eventually triggered an acute crisis. The economic breakdown eventually forced Ghana into an IMF bailout programme, a painful but unavoidable intervention aimed at preventing a deeper national economic collapse.
By the end of 2024, Ghana’s inflation had surged beyond 54 per cent at the peak of the crisis, the Cedi had experienced one of its worst depreciations in modern history, the country had lost access to international capital markets, public debt had become unsustainable and gross financing needs had escalated dangerously.
Worst of all, domestic bondholders suffered painful haircuts under the Domestic Debt Exchange Programme (DDEP), while confidence in economic management had collapsed significantly.
These developments were not caused by global shocks alone. Many countries experienced COVID-19 disruptions and the global inflation surge. Yet few countries with Ghana’s resource base ended in sovereign default, debt restructuring, and emergency IMF intervention.
The IMF itself acknowledged that Ghana suffered “marked deterioration” in programme performance at the end of 2024 because of fiscal slippages, delayed reforms, inflation pressures, arrears accumulation, and weak programme implementation.
How Ghana entered the IMF Programme
Between 2017 and 2024, Ghana’s public debt increased sharply. According to official Ministry of Finance and IMF data, Ghana’s total public debt exceeded GH¢761 billion by the end of 2024, debt-to-GDP ratios became unsustainable, external debt servicing pressures intensified, and interest payments consumed a dangerously high share of government revenue.
At the same time, fiscal deficit widened considerably, domestic arrears accumulated, inflation accelerated rapidly and foreign exchange reserves weakened significantly.
The Bank of Ghana also disclosed that more than GH¢60 billion was advanced to government during the previous administration through monetary financing arrangements that exceeded prudent central banking norms. Those excessive advances contributed directly to inflationary pressures, exchange-rate instability, reserve depletion, rising interest rates, and Ghana’s eventual loss of access to international capital markets. Ultimately, Ghana defaulted on major debt obligations and entered the IMF programme in 2022.
There came the Domestic Debt Exchange Programme that affected pensioners, financial institutions, businesses, and ordinary bondholders emerged from this broader fiscal crisis. These are not partisan claims – they are reflected in IMF reports, Bank of Ghana financial statements, and Ministry of Finance fiscal data. By the time the current administration assumed office, the economy required not cosmetic adjustments but a comprehensive stabilisation programme.
The intervention by the current Government
The scale of the inherited crisis required decisive corrective measures. The current administration therefore implemented aggressive fiscal consolidation, expenditure rationalisation, tighter monetary policy coordination, reserve rebuilding measures, debt restructuring reforms, stronger public financial management controls, and tighter restrictions on central bank financing of government. These interventions imposed short-term adjustment costs but were necessary to restore stability.
These measures, within barely one and a half years, has made the country move from severe fiscal distress, sovereign default, exchange-rate instability, soaring inflation, reserve depletion, and loss of investor confidence to a position where the IMF has formally acknowledged Ghana’s “substantial stabilisation gains” and approved the country’s transition from an Extended Credit Facility (ECF) programme into a new Policy Coordination Instrument (PCI) arrangement.
This transition is not merely symbolic. It is a major international endorsement of Ghana’s improving macroeconomic fundamentals, stronger policy credibility, and reform trajectory. The transition from economic distress to stabilisation did not happen automatically. It required painful reforms, coordinated leadership, and difficult policy decisions.
The Cost of Stabilisation: Understanding the Bank of Ghana’s 2025 Losses
Much of the recent political controversy surrounding the Bank of Ghana’s 2025 Financial Statements has deliberately ignored the economic context behind the reported accounting losses and negative equity position.
The Bank of Ghana’s losses must be understood within the broader context of restoring macroeconomic stability after severe fiscal deterioration. According to available fiscal data, Ghana recorded fiscal deviations of approximately 3.1 per cent of GDP in 2024, equivalent to more than GH¢36 billion in excess spending.
That excessive election-year spending injected massive liquidity into the economy, worsened inflationary pressures, weakened the cedi, and forced the Bank of Ghana to undertake aggressive monetary tightening and sterilization operations through Open Market Operations (OMO).
The resulting OMO costs therefore represented the unavoidable cost of restoring stability after fiscal indiscipline. They were corrective stabilisation costs – not evidence of economic collapse. Indeed, as fiscal consolidation strengthened and inflation declined, interest rates and OMO-related yields also began falling sharply. The Bank of Ghana policy rate declined significantly from its crisis-era levels, reflecting improving macroeconomic conditions and easing inflationary pressures.
Negative Equity Does Not Mean Central Bank Insolvency
One of the most misleading narratives being advanced by some critics is the attempt to portray the Bank of Ghana’s negative equity position as evidence of institutional collapse. This argument is economically inaccurate. Central banks are fundamentally different from commercial banks.
Several major central banks globally including the US Federal Reserve, the European Central Bank, and the Bank of England have recorded negative equity positions following aggressive tightening cycles and post-crisis stabilisation interventions.
A central bank’s effectiveness depends primarily on monetary policy credibility, reserve adequacy, operational independence, inflation management, and confidence in the institution.
The Bank of Ghana has since noted its capacity to operational, fully liquid, and fully capable of executing monetary policy. Its temporary negative equity position reflects the accounting consequences of decisive stabilisation measures implemented after severe macroeconomic deterioration.
Despite the severity of the inherited crisis, the stabilisation measures introduced by the current administration have produced measurable results within a relatively short period. The recovery is now visible across nearly every major macroeconomic indicator.
Exchange Rate Stabilisation
The cedi has stabilised considerably compared to the severe volatility experienced during the peak of the crisis. Improved reserve accumulation, tighter fiscal coordination, declining inflation, and stronger investor confidence have all contributed to exchange-rate stabilisation.
The appreciation and stabilisation of the cedi generated, import-related savings exceeding GH¢60 billion, government foreign exchange-related savings estimated above GH¢12 billion, and improved cost predictability for businesses.
Reserve Accumulation
One of the strongest indicators of Ghana’s recovery has been the improvement in gross international reserves. According to official data and IMF assessments, gross international reserves rose to approximately US$13.8 billion, among the strongest reserve positions Ghana has recorded in recent years.
The IMF itself praised Ghana for rebuilding international reserves, strengthening external buffers, and improving reserve adequacy.
The Domestic Gold Purchase Programme: A Strategic Game Changer
One of the most strategic innovations implemented by the current administration and the Bank of Ghana has been the Domestic Gold Purchase Programme. The programme builds assets to strengthen Ghana’s external reserves, reduce dependence on the US dollar, support cedi stability, diversify reserve assets, and build stronger buffers against future external shocks.
Under the programme, the Bank of Ghana purchases gold from local mining companies and aggregators and adds the gold to Ghana’s reserve portfolio. Bank of Ghana official data indicate that Ghana’s gold reserves increased from approximately 8.7 tonnes in 2021 to more than 37 tonnes by 2025. This represents one of the most ambitious reserve accumulation programmes in Africa.
The programme has strengthened reserve adequacy, improved investor confidence, supported exchange-rate stabilisation, and reduced structural pressure on foreign currency demand.
Reuters also reported that Ghana intends to expand reserve accumulation further through agreements requiring portions of gold output to be sold domestically to strengthen national reserves. The improving economic indicators did not go unnoticed internationally. Multilateral institutions, investors, and market observers increasingly began acknowledging Ghana’s progress.
Debt Restructuring Progress
The government made substantial progress in debt restructuring negotiations. The IMF acknowledged Ghana’s progress in restoring debt sustainability through, bilateral creditor agreements, domestic debt restructuring, and external commercial debt negotiations. These reforms were critical in restoring investor confidence and reducing debt servicing pressures.
Ghana’s Macroeconomic Stabilisation Gains and IMF Praise for Recovery
The IMF acknowledged Ghana’s significant progress in reducing inflationary pressures and restoring macroeconomic stability. The stabilisation of inflation has reduced pressure on household purchasing power, improved business confidence, reduced uncertainty, and supported gradual reductions in interest rates. The IMF’s public assessments of Ghana’s recent performance have been remarkably positive. In its May 2026 statement, the IMF declared: “Ghana’s ECF-supported economic programme has delivered substantial stabilisation gains.” The IMF further acknowledged the country’s stronger fiscal discipline; improved reserve accumulation; declining inflation; stronger programme ownership; decisive corrective actions; and improving macroeconomic stability.
Similarly, Reuters reported that Ghana and the IMF successfully reached agreement on the sixth and final review of the programme, paving the way for the transition into the new Policy Coordination Instrument arrangement. The PCI arrangement is particularly significant because it is designed for countries that have restored reasonable macroeconomic stability and policy credibility. The transition, therefore, represents a major international endorsement of Ghana’s improving economic fundamentals. However, economic recovery of this magnitude does not happen without coordinated leadership and institutional discipline.
The Role of President Mahama, the Finance Minister and the Bank of Ghana
Credit must be given to the institutions and leadership that coordinated Ghana’s recovery. President John Dramani Mahama provided the political leadership necessary to restore discipline, stabilise policy direction, and strengthen macroeconomic coordination.
The Ministry of Finance, under the leadership of Finance Minister Dr Cassiel Ato Forson, implemented difficult but necessary fiscal consolidation measures, expenditure controls, debt restructuring reforms, and public financial management interventions.
Similarly, the Bank of Ghana under Governor Dr Johnson Asiama pursued disciplined monetary tightening, inflation-targeting measures, reserve rebuilding, exchange-rate stabilisation, and stronger monetary policy credibility.
The coordination between the Presidency, Ministry of Finance, and Bank of Ghana has been central to Ghana’s stabilisation success.
The Lessons Ghana Must Never Forget
Ghana’s recent economic crisis offers several critical lessons.
First, fiscal indiscipline has severe national consequences.
Second, excessive election-year spending can destabilise entire economies.
Third, excessive monetary financing by central banks undermines macroeconomic stability.
Fourth, macroeconomic credibility is difficult to rebuild once lost. Fifth, sustainable economic management requires discipline, transparency, institutional coordination, and long-term planning.
Although Ghana’s macroeconomic stabilisation gains are significant, the country cannot afford complacency. The next phase must focus on transforming stabilisation into long-term structural economic transformation.
Bold Recommendations for Ghana’s Next Phase of Economic Transformation
Although Ghana has made substantial progress, stabilisation alone is not sufficient. The country must now transition from stabilisation to transformation. That requires several intentional actions.
Enact a Stronger Fiscal Responsibility Framework
Parliament should strengthen fiscal responsibility laws to prevent future governments from engaging in excessive election-year spending. Clear fiscal deficit ceilings, debt limits, and sanctions for breaches must be enforced.
Legally Restrict Central Bank Financing of Government
Ghana must permanently prevent a return to excessive monetary financing. Strict legal caps should be enforced on Bank of Ghana financing to government. The Central Bank’s independence must be protected from political interference.
Build a Strategic Sovereign Reserve Fund
The Domestic Gold Purchase Programme should evolve into a broader sovereign reserve strategy. Gold reserves, petroleum revenues, and strategic mineral revenues should support a long-term stabilisation and sovereign wealth framework.
Accelerate Industrialisation and Export Diversification
Ghana must reduce its overdependence on imports. The government should aggressively support agro-processing, pharmaceuticals, manufacturing, value-added mineral processing, petrochemicals, digital services, and export-oriented industrialisation.
Formalise and Modernise the Gold Sector
The establishment of GoldBod and broader gold sector reforms should be accelerated to reduce smuggling, improve traceability, increase state revenue, and maximise foreign exchange retention.
Deepen Domestic Revenue Mobilisation
Ghana’s tax-to-GDP ratio remains below the level required for sustainable development financing. The country must improve tax compliance, digitise revenue collection systems, expand the formal economy, and reduce revenue leakages.
Prioritise Productive Capital Expenditure Over Consumption Spending
Future borrowing must prioritise infrastructure, energy, transportation, industrial parks, irrigation, and productivity-enhancing investments. Borrowing for recurrent consumption expenditure must end.
Maintain Strong IMF Programme Discipline Under the PCI
The new PCI arrangement should not become an excuse for policy complacency. Government must maintain fiscal discipline, expenditure controls, debt sustainability reforms, reserve accumulation, and macroeconomic coordination.
Conclusion
Ghana’s recent recovery demonstrates that disciplined economic management, institutional coordination, and political commitment can restore macroeconomic stability even after severe economic deterioration.
The task now is to consolidate these gains, protect macroeconomic discipline, and transition Ghana from economic recovery toward sustainable transformation, industrial growth, job creation, and long-term prosperity.
The IMF programme may have ended. But the responsibility to build a resilient and self-sustaining Ghanaian economy has only just begun.
GNA
Edited by Beatrice Asamani Savage