Ghana’s economy remains exposed to external shocks due to its heavy reliance on gold and other commodity exports, with adverse movements in export earnings and global commodity prices posing risks to debt sustainability, the International Monetary Fund (IMF) has warned.
The IMF said although Ghana had made progress in addressing its economic challenges, debt vulnerabilities remained elevated and required continued monitoring.
In its latest Article IV Consultation and proposed Policy Coordination Instrument (PCI) report, the Fund said Ghana’s debt dynamics remained sensitive to external shocks because of the country’s dependence on commodity exports, particularly gold.
“Debt dynamics remain sensitive to external shocks given Ghana’s reliance on gold and other commodity exports,” the IMF said.
The Fund warned that stress tests showed that unfavourable export and commodity price shocks could push Ghana’s debt solvency and liquidity indicators above their thresholds for an extended period.
The IMF identified the exchange rate as a major channel through which external shocks could affect Ghana’s economy, citing the significant proportion of foreign currency-denominated external debt and the presence of non-resident investors in the domestic debt market.
“A key transmission channel is the exchange rate, given the substantial share of FX-denominated external debt and non-resident holdings of domestic debt,” the IMF noted.
The assessment also highlighted contingent liabilities as a major source of downside risk, particularly fiscal pressures from the energy sector, possible financial sector recapitalisation needs, and quasi-fiscal activities.
The IMF said reducing these vulnerabilities would require continued fiscal reforms, stronger sectoral policies, adequate external buffers, and greater efforts to diversify Ghana’s export base.
“These risks underscore the importance of fiscal and sectoral reforms, adequate external buffers, exchange rate flexibility, and efforts to diversify exports,” the Fund said.
The IMF further stressed the need for Ghana to complete ongoing debt restructuring efforts, including negotiations with remaining external commercial creditors and the signing of outstanding bilateral agreements.
Ghana’s economy has benefited from strong gold exports in recent years, which have supported foreign exchange inflows and government revenues.
However, the IMF’s assessment indicates that dependence on commodities also exposes the country to swings in global prices and demand.
The Fund’s warning comes as Ghana continues efforts to restore debt sustainability and strengthen economic resilience following its recent debt crisis.
Source ; citinewsroom
