Fitch Solutions indicates that Ghana will persist with fiscal consolidation efforts in line with its IMF program, viewing withdrawal as unlikely due to the reliance on IMF for stability. While this tightening aims to stabilize the economy, it may provoke public discontent despite decreased inflation rates. Demonstrations may occur but are expected to be localized and short-lived.
Fitch Solutions, a UK-based research firm, projects that Ghana will continue its fiscal consolidation efforts, adhering to its ongoing program with the International Monetary Fund (IMF). The firm regards it as unlikely that Ghana will withdraw from the IMF arrangement, especially after unsuccessful renegotiation attempts, due to the nation’s dependency on IMF support for external stability.
The importance of IMF funding is underscored by its role in ensuring Ghana’s foreign exchange liquidity and bolstering investor confidence in the nation’s economic governance. This financial support is deemed crucial for maintaining macroeconomic stability in Ghana.
However, Fitch Solutions anticipates that fiscal tightening measures may encounter public pushback. Despite a decrease in inflation from a high of 53.6% in January 2023 to 23.5% in January 2025, the rate remains significantly above the ten-year pre-pandemic average of 12.1%.
The dual approach of reducing government expenditure alongside increased taxation is projected to exert additional pressure on household finances, leading to potential public dissatisfaction. Fitch Solutions warns that while protest activities may rise, they are expected to be localized and short-lived, posing minimal risks to commercial operations.
In summary, Ghana’s commitment to continuing its fiscal consolidation efforts under the IMF program remains critical due to its reliance on external support for economic stability. However, the potential for public discontent related to fiscal tightening cannot be overlooked, as it may influence social dynamics while largely remaining contained geographically.
Original Source: www.ghanaweb.com
