Introduction

After two decades of strong and broadly inclusive economic growth which enabled Ghana to reach middle income status and also helped the country to make significant progress towards the attainment of the Millennium Development Goals (MDGs), the country’s economic performance has weakened recently, compounded by the sharp drop in oil and commodity prices and acute power shortages. Economic growth has decelerated sharply and the fiscal and current account deficits have widened significantly, leading to a rapid depreciation of the local currency, re-emergence of double-digit inflation, and rising public debt.

The government’s efforts to achieve fiscal consolidation since mid-2013 were undermined by policy slippages, external shocks and rising interest cost. Until mid-2014, the country’s net international reserves position had weakened significantly and the cedi exchange rate depreciated sharply, fueling inflationary pressures (IMF, 2015). To deal with these challenges, the government approached the IMF for a three-year Extended Credit Facility (ECF) to support a program to achieve strong fiscal consolidation, restore macroeconomic stability and debt sustainability, and also foster market confidence to help achieve the country’s transformation objectives. The program was approved by the Fund in April 2015 to run between 2015 and 2017.

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