GHANA

Key conditions andchallenges

Table 1

2023

Population, million

34.1GDP, current US$ billion

76.2

GDP per capita, current US$2234.2

International poverty rate ($2.15)

a25.2
a48.8

a78.5

Lower middle-income poverty rate ($3.65)
Upper middle-income poverty rate ($6.85)
Gini index

a43.5

School enrollment, primary (% gross)

b97.9

b63.8

Total GHG emissions (mtCO2e)

18.3

Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2016), 2017 PPPs.
b/ Most recent WDI value (2021).

Ghana’s economic conditions improved in
2023 but challenges remain, notably elevated inflation, subdued growth, and substantial pressure on public finances anddebt sustainability. These lingering challenges will continue to subdue growth in
2024 at 2.9 percent but, in the medium
term, growth will rebound to its longterm potential as prevailing conditions
stabilize. Accordingly, lower growth projections coupled with recent bouts of highinflation mean that poverty in 2024 will
be at its highest level in over a decade.

Ghana is in debt distress and public debt
is unsustainable. In response, the Government has embarked on a comprehensive
debt restructuring, a significant fiscal consolidation program, and the implementation of reforms to foster economic stabilityand resilience. The authorities’ stabilization efforts are being supported by anExtended Credit Facility (ECF) programof the International Monetary Fund (IMF)
for approximately US$3 billion. The program aims to attain a moderate risk ofdebt distress over the medium term andreplenish the foreign exchange reservesof the Bank of Ghana (BoG) to cover
three months' worth of imports by theconclusion of the program.
The crisis has taken a toll on the pace of economic growth – which decelerated to an estimated 2.9 percent in 2023 and is projected
to remain weak in 2024. Returning growth toits potential rate of 5 percent will require
macroeconomic stability. Over the longer
term, structural reforms aimed at promoting private sector development and increasing FDI attractiveness are necessary to raise
the country’s growth potential. Critical reforms include strengthening the insolvency
regime, access to finance, the energy sector,and the legal and regulatory environment
faced by foreign direct investors. Accelerating digitalization and harnessing the opportunities offered by the Africa Continental
Free Trade Agreement (ACFTA) throughintegration with global value chains will
also be important in this regard. These willneed to be complemented with measures
to expand well-targeted social protection
programs to mitigate the impact of the crisis and fiscal consolidation on the poor andmost vulnerable.

Recent developments
In 2023, economic growth slowed down toan estimated 2.9 percent, albeit surpassing
initial projections for the year. This growth
was primarily driven by robust expansions
in the agriculture and services sectors
while industrial production fell by 1.2 percent due to contractions oil, electricity, andconstruction sub-sectors; and subdued
growth in gold and manufacturing.
Fiscal consolidation is broadly on trackwith estimated deficit of 4.7 percent ofGDP, significantly lower than the 11 percent deficit in 2022. At 15.7 percent of GDPin 2023, revenues and grants reached thesame level as 2022 despite lower oil revenues. The government implemented measures to contain wage bill increase, reduced Capex and spending on goods andservices leading to a reduction in expenditures from 26.6 percent of GDP in 2022
to an estimated 20.4 percent in 2023. Decreased in interest payments also helped
contain expenditures. The key financial
soundness indicators demonstrate overall
stability but credit to the private sector has
contracted reflecting increased risk aversion among banks, as non-performing
loans ratio increased above 20 percent.

FIGURE 1 Ghana / Real GDP growth and contributions toreal GDP growth

FIGURE 2 Ghana / Actual and projected poverty rates andreal GDP per capita

Percent, percentage points
25

Poverty rate (%)

20

80

1570

Real GDP per capita (constant LCU)

90

10

7000
6000
5000

60

50-550

4000

40

3000

-1030-15

20-20

10

2021

2022

Gov. cons.
Inventories
Statistical disc.

2023

2024

Exports
Private cons.
GDP

2025

2026

2000
1000

0

GFCF
Imports

02012

Sources: Statistical service and World Bank.

2014

2016

2018

2020

1

Apr 242024

2026

International poverty rate

Lower middle-income pov. rate

Upper middle-income pov. rate

Real GDP pc

Source: World Bank. Notes: see Table 2.

MPO

2022

Inflation has declined significantly but remains well above the Bank of Ghana(BoG) target range of 8±2 percent. Yearon-year inflation fell from 53.4 percent inJanuary 2023 to 23.2 percent in December 2023, reflecting more stable exchange
rates and the effects of monetary policy tightening in 2022-23. Over the firstmonths of 2024, the deceleration of inflation has stalled due to pass-through ofthe depreciation on prices of imported
goods, on non-food inflation while foodinflation marginally fell.
In 2023, the (pre-external debt restructuring) current account balance improved
to an estimated deficit of 1.7 percent ofGDP, from the 2022 deficit of 2.3 percent,as a decline in oil exports was more-thanoffset by import compression, strong remittances, and lower income repatriation
by mining and oil companies. The capital
account continues to be in deficit due to
weak FDI inflows and continued net outflows of portfolio investments. Thus, BOP
remained in high deficit, at 3.2 percentof GDP. Gross international reserves was
equivalent to 1.1 months of imports at theend of 2023, an increase from 0.7 months ofimports in December 2022.

The immediate implications of the macroeconomic crises and debt distress in thecountry are the worsening in poverty andliving standards of the population. The“international poverty” rate is estimatedat 30.3 percent in 2023, a worsening of
3.5 percentage points since 2022.

Outlook
Growth is expected to remain weak in 2024
at 2.9 percent as the ongoing fiscal consolidation, high inflation rates, elevated interest rates, and lingering macroeconomic
uncertainties are all projected to dampen
private consumption and investment, limiting non-extractive sector growth. However, growth will gradually rebound to its
long-term potential of approximately 5
percent by 2026 as prevailing conditions
stabilize. The external sector is forecast to
significantly improve over the medium
term due to enhanced net capital inflows
and continued trade surpluses.
In 2024, fiscal consolidation is expected to
be on track due to continued revenue andexpenditure reforms; and the external debt

TABLE 2 Ghana / Macro poverty outlook indicators

restructuring. By 2026, the authorities expect to generate a primary surplus of 1.4
percent of GDP, a fiscal adjustment almost
4 percentage points of GDP between 2023
to 2026.
Ghana’s outlook is subject to significant
downside risks as baseline projections depend on the completion of the authorities’
comprehensive debt restructuring and successful reform implementation, including
meeting projected revenue mobilization
targets. Further, there is significant risks tofinancial sector stability, due to the DDE
while exchange rate, credit, and liquidity
risks further add to the vulnerabilities.
Possible policy slippages due to the approaching end-2024 general elections represent additional domestic vulnerabilities.
Overall, the combination of economic challenges, fiscal consolidation measures, anddownside risks suggests a challenging environment for poverty reduction efforts inGhana. Adjustments to the country’s main
cash transfer program, Livelihoods Empowerment Against Poverty, are expected
to help the poorest of the poor yet more isneeded. Poverty is expected to change little between 2024 and 2025 and is expected
to come down slowly by 2026.

(annual percent change unless indicated otherwise)

Real GDP growth, at constant market prices
Private consumption
Government consumption
Gross fixed capital investment
Exports, goods and services
Imports, goods and services

2021
5.1
0.8
82.1
4.5
69.1
113.8

2022
3.8
4.8
-31.7
28.6
9.6
13.8

2023e
2.9
4.6
-8.0
3.9
5.8
6.3

2024f
2.9
4.9
1.9
-2.7
10.3
8.3

2025f
4.4
5.0
-0.6
9.3
6.4
9.2

2026f
4.9
5.7
-2.2
9.9
7.2
10.1

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

5.4
8.5
-0.5
9.4

3.7
4.2
0.6
6.2

2.94.5
-1.2
5.5

2.9
3.2
3.8
2.0

4.4
5.4
4.1
4.1

4.9
3.9
5.8
4.8

Inflation (consumer price index)

10.0

31.5

40.3

23.2

11.5

8.0

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-3.7
2.0

-2.3
2.0

-1.7
1.5

-1.9
2.7

-2.2
3.3

-2.4
3.4

-11.4
15.3
76.7
-4.1

-11.0
15.6
88.7
-3.6

-4.7
15.7
86.1
-0.5

-5.0
16.7
83.6
0.6

-4.0
17.3
80.9
1.6

-3.5
18.2
77.9
1.4

24.8
47.0
76.7

26.8
50.2
78.9

30.3
55.3
82.8

32.9
58.7
84.6

33.2
59.4
84.8

32.2
57.5
83.9

6.0
129.8

11.8
121.2

7.3
117.0

4.8
114.3

5.9
110.9

7.1
106.8

Fiscal balance (% of GDP)
Revenues (% of GDP)aa,bDebt (% of GDP)a
Primary balance (% of GDP)c,dInternational poverty rate ($2.15 in 2017 PPP)c,dLower middle-income poverty rate ($3.65 in 2017 PPP)c,dUpper middle-income poverty rate ($6.85 in 2017 PPP)
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD.
Notes: e = estimate, f = forecast.
a/ Fiscal and debt forecasts do not factor in the impact of the ongoing Debt Restructuring (DR) as the process is yet to conclude.
b/ Starting from 2022, public debt numbers include, in addition to central government debt, explicitly guaranteed (and certain implicitly guaranteed) SOE debt, cocobills issued
by Cocobod, and reconciled domestic arrears to suppliers.
c/ Calculations based on 2016-GLSS-VII. Actual data: 2016. Nowcast: 2017-2023. Forecasts are from 2024 to 2026.
d/ Projections using microsimulation methodology.

MPO2Apr 24