The International Monetary Fund (IMF) has disclosed in its Staff Report on Ghana, titled "2023 Article IV Consultation," that Ghana is still in debt distress, with the current position assessed as unsustainable.

“Pending completion of the debt restructuring, the attached Debt Sustainability Analysis (DSA) continues to show large and protracted breaches to the standard thresholds”, the IMF said.

As part of the ongoing debt restructuring efforts and in light of substantial and prolonged breaches to the Debt Sustainability Analysis (DSA) thresholds, the International Monetary Fund (IMF) stated in its Staff Report submitted to the Executive Board that Ghana remains in debt distress. The DSA assessment indicates that the debt remains unsustainable and has not changed since the publication in May 2023.

A meeting between a team from the IMF and the Government of Ghana took place on October 6, 2023, to discuss policies supporting the IMF arrangement under the Extended Credit Facility (ECF) program.

In 2023, the Ghanaian government initiated a debt restructuring program to bring the country's debt to sustainable levels, a prerequisite for securing the IMF program. The comprehensive debt restructuring strategy aimed to restore a "moderate" risk of debt distress within the IMF-World Bank Debt Sustainability Framework for low-income countries (LIC-DSF).

The restructuring efforts targeted external debt service relief during the program from 2023 to 2026 to address the external financing gap, and domestic debt restructuring was designed to significantly reduce domestic financing pressures.

The International Monetary Fund (IMF) emphasized that the macroeconomic framework serves as the foundation for the Debt Sustainability Analysis. The staff baseline scenario is aligned with the macroeconomic trajectory outlined in the Fund-supported program, aimed at reinstating macroeconomic stability and ensuring debt sustainability in the medium term.

Ghana experienced significant deterioration in its fiscal and external positions due to the impacts of the Covid-19 pandemic, global financial tightening, and the conflict in Ukraine. These external shocks, coupled with existing fiscal and debt vulnerabilities, resulted in a notable increase in both public and external debt. Consequently, Ghana faced challenges accessing international markets in late 2021, and the macroeconomic situation further complicated in 2022, marked by substantial losses.

The Fund highlighted that the large fiscal deficits and the economic slowdown induced by the pandemic led to a surge in public debt from 63.0% of Gross Domestic Product (GDP) in 2019 to 93.3% of GDP by the end of 2022. Domestic debt also reached 50% of GDP in 2022, with 16.0% of GDP held by the Bank of Ghana, while public external debt stood at 43.3% of GDP.

To address these challenges, the authorities have been implementing a comprehensive debt restructuring strategy. The objective is to achieve debt sustainability and a moderate risk of debt distress under the LIC-DSF framework by bringing down both debt stock and flow ratios to their respective thresholds.

This includes “reduction in the PV of total debt-to-GDP and external debt service-to-revenue ratios to 55% and 18%, respectively, by 2028”.

The report was also of the view that the Ministry of Finance should increase its surveillance of debt issuance by State Owned Enterprises and other public entities “Monitor and prevent over collateralization of debt issuance”.