Was the IMF Program derailed? – Facts show 2015 programme was off-track, not 2023 programme

A fresh debate has erupted over the performance under successive International Monetary Fund (IMF) bailout programmes following claims by some political actors that the country’s current IMF-supported programme suffered a derailment ahead of the 2024 elections.

However, a comparative analysis released by the New Patriotic Party (NPP) Policy Committee on Finance and Economy argues that available IMF data shows the 2015 Extended Credit Facility (ECF) programme under the previous National Democratic Congress (NDC) administration experienced a far more severe breakdown than the ongoing 2023 ECF arrangement.

The analysis, authored by spokesperson of the committee, Issah Fuseini, examines the two most recent IMF-supported programmes and concludes that while both experienced election-cycle pressures and fiscal challenges, the scale and nature of the slippages under the 2015 programme were significantly worse than those recorded under the current arrangement.

According to the report, the IMF-supported programmes have historically followed a similar pattern in which ambitious fiscal consolidation and macroeconomic stability targets are initially adopted, but implementation weakens as political pressures intensify during election periods.

The report explained that although both programmes required adjustments and corrective measures at different stages, the 2015 ECF witnessed a broader collapse in performance criteria by the time of the IMF’s Fourth Review in 2017.

The 2015 IMF programme was introduced during a period of severe economic instability under the Mahama administration, when Ghana was battling high inflation, a rapidly depreciating cedi, rising debt levels, worsening fiscal deficits and a growing energy crisis popularly referred to as “dumsor.”

At the time, the IMF programme sought to restore fiscal discipline, stabilise the economy, and rebuild investor confidence through expenditure controls, revenue reforms, and debt management measures.

However, by the end of June 2016, Ghana had missed most of the key quantitative performance criteria under the programme, raising concerns within the IMF about the country’s ability to maintain the agreed fiscal adjustment path.

The report states that by September 2016, Ghana had missed 8 out of 14 programme targets under the 2015 ECF arrangement.

Among the missed targets were the primary fiscal balance, net international reserves, and arrears ceilings, which formed the core stabilisation anchors of the programme.

The IMF also found that the country breached arrears targets and failed to meet important social protection spending commitments under the programme.

In contrast, the report argues that Ghana’s performance under the 2023 ECF programme was comparatively stronger despite fiscal pressures ahead of the 2024 elections.

According to the analysis, all end-December 2024 binding performance criteria under the 2023 programme were met, with only two out of eleven indicators missed at the Fourth Review stage.

The report acknowledged that Ghana breached the IMF’s outer inflation consultation band and missed the indicative target relating to the accumulation of payables, largely due to fiscal slippages and expenditure pressures ahead of the elections.

However, it insists that unlike the 2015 programme, the 2023 arrangement maintained compliance with critical performance indicators, including net international reserves, debt ceilings, and central bank financing restrictions.

The report further highlighted differences in economic growth outcomes under both programmes.

According to the analysis, Ghana recorded economic growth of only 3.5 percent at the end of 2016 under the 2015 ECF programme, while the economy expanded by 5.8 percent at the end of 2024 under the current arrangement.

One of the major issues highlighted in the report relates to the accumulation of arrears and payables under both programmes.

Under the 2015 ECF, the IMF recorded breaches in the ceiling on arrears accumulation and noted that the government failed to prevent the build-up of new domestic arrears.

Government at the time subsequently committed to eliminating arrears by 2019 and initiated audit processes to validate outstanding obligations.

Under the 2023 ECF programme, the challenge reportedly shifted from formal arrears accumulation to the build-up of payables, particularly within ministries, departments, agencies, and the energy sector.

The report disclosed that net payables rose by GH¢45.604 billion against a zero ceiling at the end of 2024, reflecting spending commitments outside the official GIFMIS financial control system ahead of the elections.

Despite this development, the report argues that the current programme still demonstrates stronger institutional discipline compared to the 2015 arrangement.

On external reserves, the report noted that Ghana failed to meet the net international reserves floor under the 2015 programme, signalling significant external-sector pressure at the time.

However, under the 2023 arrangement, Ghana reportedly exceeded the reserve target, recording net international reserves of US$1.719 billion against an adjusted floor of US$886 million at the end of 2024.

The report also highlighted improvements in central bank financing discipline under the current programme.

According to Issah Fuseini

Spokesperson, NPP Policy Ctee on Finance & Economy both the 2015 and 2023 programmes maintained zero direct financing of government by the Bank of Ghana.

However, the report argues that the 2023 programme demonstrated stronger institutional continuity, with the ceiling on Bank of Ghana claims on central government and public entities successfully maintained.

On inflation performance, the report acknowledged that both programmes experienced challenges.

Under the 2015 ECF, inflation breached the IMF’s inner consultation band in June 2016 before returning within the acceptable range by the end of the year.

Under the 2023 arrangement, inflation at the end of 2024 rose to 23.8 percent, exceeding the programme’s upper outer band of 22 percent and triggering a Monetary Policy Consultation with the IMF Executive Board.

The report, however, argued that inflation pressures under the current programme did not translate into broader breaches of the programme’s binding quantitative performance criteria.

He further indicated that Ghana performed better under the current programme in the areas of revenue mobilisation and social protection spending.

According to the report, the country exceeded its non-oil revenue target under the 2023 ECF and also met its social spending floor.

By comparison, the 2015 programme reportedly failed to achieve its social protection spending target, raising concerns about the protection of vulnerable groups during fiscal adjustment.

Issah Fuseini, the spokesperson, concluded that while both IMF programmes experienced election-related pressures and implementation weaknesses, the nature of the challenges differed significantly.

He argued that the 2015 ECF represented a “classic programme-performance breakdown” characterised by widespread breaches in fiscal balance, reserves, arrears, and structural reform targets.

The 2023 ECF, on the other hand, was described as a more contained institutional challenge in which Ghana largely complied with core programme conditions but struggled with expenditure control, inflation management, and delayed structural reforms.

Issah Fuseini further explained that the evidence suggests that Ghana has made institutional progress in areas such as reserve management, debt ceiling compliance, central bank financing discipline, and social spending protection.

However, it warned that the country still faces deeper political and governance challenges relating to election-year expenditure pressures, fiscal discipline, and structural reform implementation.

The report maintained that describing the 2023 IMF programme as “derailed” would therefore be inaccurate when compared to the broader performance breakdown recorded under the 2015 ECF arrangement.