Ghana will continue its fiscal consolidation efforts in line with the IMF program, as reliance on IMF assistance is crucial for economic stability. Despite declining inflation, increased taxes and reduced spending may lead to public resistance, although protests are expected to be localized and limited in duration.
Fitch Solutions, a UK-based research firm, has indicated that Ghana is poised to continue its fiscal consolidation efforts in alignment with its ongoing International Monetary Fund (IMF) program. The firm believes it is improbable that Ghana will withdraw from the IMF arrangement, especially after unsuccessful attempts at renegotiation, highlighting the nation’s dependency on IMF support for external stability.
The critical nature of IMF funding is underscored, as it plays a vital role in ensuring Ghana’s foreign exchange liquidity and bolstering investor confidence in the country’s economic management, which is essential for maintaining macroeconomic stability.
Fitch Solutions also projected that while fiscal tightening measures could stabilize the economy, they may encounter significant public pushback. Although inflation has decreased from a peak of 53.6% in January 2023 to 23.5% in January 2025, it continues to surpass the 10-year pre-pandemic average of 12.1%.
The anticipated reductions in government spending alongside increased tax burdens are expected to strain household finances, potentially leading to heightened public discontent. Fitch Solutions noted that this situation could result in elevated protest levels historically, albeit with the likelihood of protests being localized and short-lived, presenting minimal risks to commercial operations.
In conclusion, Ghana is expected to maintain its commitment to fiscal consolidation under the IMF program due to its dependence on IMF support for economic stability. Despite projected improvements in inflation, the anticipated fiscal measures may provoke public dissent. However, the localized nature of any protests is likely to mitigate risks to commercial activities.
Original Source: www.ghanaweb.com
