ľ¹ÏÓ°Ôº

Ghana sits on the Atlantic Ocean and borders Togo, Cote d'Ivoire, and Burkina Faso. Its population is about 34.8 million (2018). In the past two decades, it has taken major strides towards democracy?under a multi-party system, with its independent judiciary winning public trust. Ghana consistently ranks in the top three?African countries for freedom of speech and press.

President Akufo-Addo has faced a much more challenging environment during his second term His success will depend on his government¡¯s ability towards leading Ghana on the path of debt sustainability and reaching an agreement with external creditors on external debt restructuring under the IMF program.

Recent economic developments 

The country faced a surge in public debt due to fiscal measures taken in response to external shocks, which resulted in losing access to international financial markets. This led to debt distress, dwindling international reserves, and escalating inflation. To tackle these challenges, Ghana implemented substantial macroeconomic policy adjustments, including comprehensive debt restructuring and fiscal consolidation. Maintaining this recovery will require ongoing advancements in tax policy, revenue administration, public financial management reforms, and structural reforms in the energy and cocoa sectors. The government's program is supported by an IMF Extended Credit Facility, approved in May 2023 for approximately $3 billion, and by the World Bank¡¯s Development Policy Operations.

Poverty in Ghana had been on a downward trend since the 1990s, but the COVID-19 pandemic marked a turning point, leading to a rise in poverty levels since 2020. Weak economic growth, limited government spending, and high inflation¡ªparticularly in food prices¡ªhave worsened living standards, pushing more people into poverty, and increasing the risk of food insecurity. Returning growth to its potential rate of 5% will require macroeconomic stability. In the longer term, structural reforms aimed at promoting private sector development and increasing the attractiveness of foreign direct investment (FDI) are necessary to raise the country¡¯s growth potential. Critical reforms include strengthening the insolvency regime, access to finance, the energy sector, and the legal and regulatory environment faced by foreign direct investors. Accelerating digitalization and harnessing the opportunities offered by the Africa Continental Free Trade Agreement (AfCFTA) through integration with global value chains will also be important in this regard.

In the first half of 2024, Ghana's GDP surged by 5.9%, up from 2.8% in 2023H1, driven by an 8.1% growth in the industry sector, particularly in oil and gas. Agriculture expanded by 5.1%, despite a significant contraction in cocoa, while the services sector grew by 4.5%, down from 6% in 2023H1.

Tight monetary policy and stable exchange rates helped reduce inflation from 54.1% in December 2022 to 23.2% in December 2023, though disinflation slowed to 20.4% in August 2024 due to higher food prices and a depreciating cedi.

The current account surplus rose to 1.5% of GDP, bolstered by strong remittance flows and reduced debt service payments, with reserves increasing from $5.9 billion to $6.9 billion.

Fiscal performance was robust, with the primary deficit at 0.2% of GDP and the overall deficit lower than planned. Revenue and grants slightly underperformed, while expenditure was below target due to spending cuts. Debt restructuring deals were concluded for $5.4 billion in bilateral debt and $13 billion in Eurobond debt.

The banking sector demonstrated resilience, with assets growing by 33.3% and stable capital adequacy ratios, although the non-performing loan ratio worsened to 24.1%. Continued profit growth, recapitalization, and stringent credit standards are essential for full recovery.

Outlook

Growth projections for 2024 have been revised upwards to 4%, balancing strong first-half performance against tight fiscal and monetary policies, high interest rates, and drought conditions affecting agriculture. Assuming government emergency responses mitigate some losses from the dry spell, medium-term growth is expected to strengthen, reaching around 5% by 2026, driven by improvements in agriculture, services, and extractive industries, including small-scale gold mining and new oil reserves.

The fiscal deficit forecast for 2024 is revised down to 4.2% of GDP, reflecting nominal GDP adjustments and robust consolidation efforts. The government plans to broaden the tax base, improve compliance, and digitalize service delivery, with amendments to the Fiscal Responsibility Act and the establishment of a Fiscal Council expected to enhance fiscal discipline.

Poverty rates are projected to rise until 2026, peaking at 31.5% in 2025 before slightly declining to 30.6%, with rates at the LMIC line potentially reaching 55.1% by 2026 due to limited growth in services and agriculture and rising prices outpacing income growth for the poorest.

The outlook faces risks from drought impacts, commodity price volatility, exchange rate uncertainties, high domestic financing needs, potential pre-election policy shifts, and energy sector shortfalls, while delays in implementing structural reforms under the IMF program could undermine international creditor confidence.

Last Updated: Oct 16, 2024

The Ghana Country Partnership Framework (CPF) for FY22-26 was presented to the WBG Board on February 22, 2022. The CPF seeks to support the government in managing the impact of the COVID-19 crisis by preserving critical human capital and capabilities while taking the opportunity to build back better for a dynamic and diversified economy, creating job opportunities for a greener, more resilient, and inclusive society. The three focus areas are: (i) Enhancing conditions for private sector development with quality job growth; (ii) Improving inclusive service delivery; and (iii) Promoting sustainable, resilient development. Digital transformation is a cross-cutting theme.

World Bank Active Portfolio 

ľ¹ÏÓ°Ôº portfolio commitment is $4.8 billion covering 19 national projects (IDA, $4.2 billion), and 6 regional operations ($668 million).  Cumulative disbursement on the national IDA portfolio stands at $2.04 billion (48.5%) while the undisbursed balance is $2.08 billion as of September 24, 2024. The disbursement ratio as of September 24, 2024, is 4.98%.

IDA20 Pipeline

Ghana¡¯s IDA20 allocation is set to deliver roughly $2 billion in IDA20 ($1.66 billion to date). In FY24 the program delivered the First Resilient Recovery Development Policy Financing-DPL ($300 million), an Investment Project Financing on financial stability ($250 million) and a Program for Results (P4R) on Energy Sector Recovery ($250 million). Planned for the final year of IDA20, the second DPL for $300 million, an Additional Financing (AF) for the Water and Sanitation Project ($30 million), and the Ghana Cote d¡¯ Ivoire Interconnection Project (Regional), ($105 million, of which $35 million will come from the national PBA) are under preparation. Considering the government¡¯s request to assist with the current drought crisis in the north of Ghana, priorities are shifting, and resources will be directed to an AF to the current West Africa Food Resilience Program-FSRP ($125 million). Also, Education Sector is preparing an AF to the Ghana Accountability for Learning Outcomes Project (GALOP) for a nation-wide scale-up of successful interventions under the project. Trust funds (TFs) from Global Partnership for Education (GPE) ($111.4 million) and Jacob¡¯s Foundation ($7.4 million) will support the new scaled-up activities to improve foundational learning.

As of September 2024, the International Finance Corporation (IFC)¡¯s investment portfolio amounted to $422.5 million in financing and $6.35 million in advisory services, spanning sectors such as agribusiness, energy, financial services, healthcare, real estate, education and retail. The IFC has recently increased its focus on supporting job-creation through light manufacturing, both export and market-based import substitution, and value-added onshore manufacturing in Ghana. In financial services, IFC collaborates with regional institutions to improve mobile payments, trade, remittance payment, and SME finance. IFC also provides advisory services to government agencies, financial institutions, and private sector companies to enhance the business environment, strengthen corporate governance, and promote small-holder farmers¡¯ access to finance.

As of August 31, 2024, the Multilateral Investment Guarantee Agency (MIGA) was actively engaged in Ghana with a total gross exposure of $431.5 million across the water, energy, finance and oil and gas supply sectors. MIGA has five projects that include a water desalination project, a combined-cycle gas turbine power-generation project, a natural gas pipeline project, coverage for an equity investment by a financial institution, and capital optimization for a financial institution. As part of the new World Bank Group Guarantees platform, which will be housed at MIGA, MIGA will also leverage deeper collaboration across the World Bank Group to de-risk foreign investment, paying close attention to projects that support climate finance and boost job creation.

Last Updated: Oct 16, 2024

The Ghana Productive Safety Net Project (GPSNP) has contributed to attaining Ghana¡¯s goals for poverty alleviation by strengthening safety net systems that improve the productivity of the poor and enhancing access to livelihood opportunities and access to basic services. GPSNP support has facilitated program expansion over time to reach in 2024 about 350,000 households through the Livelihood Empowerment Against Poverty (LEAP) cash transfer program, more than 167,000 beneficiaries through a Labor-Intensive Public Works program (LIPW); and over 10,000 beneficiaries through the Productive Inclusion program to provide sustainable livelihood opportunities and help beneficiaries graduate from cash transfers. It also supports the School Feeding Program, Ghana¡¯s largest safety net, which plays a vital role in supporting the nutrition and food security of over 3.8 million children among the poorest and most vulnerable households. The (GNHR) with over 2.3 million households is improving the targeting of social protection programs and enabling their beneficiaries to access other basic services such as health insurance. Under the GPSNP the percentage of beneficiaries who initiated or expanded a household enterprise through the productive inclusion program was 89.3%, surpassing the target of 70%. The average annual earnings of unskilled workers in the short-term labor-intensive public works (LIPW) were 1078.56 cedis, surpassing the target of 600. Rigorous impact assessments showed that LIPW successfully improved key outcomes such as consumption, schooling, health, and nutrition.

The Greater Accra Metropolitan Area (GAMA) Water and Sanitation project has provided improved sanitation to 533,176 exceeding the target of 469,900 people, while 472,885 school pupils have been reached exceeding the target of 430,000 school pupils and 666,749 of the 668,000 people have benefited from the water supply improvement. Under its increasing access to sanitation component, 43,966 household toilets have been constructed under the additional financing out of a target 42,000 household toilets. The project has completed a total of 589 institutional WASH facilities in schools and healthcare facilities in GAMA and GKMA exceeding the target of 540 institutional WASH facilities.

The now closed Ghana Commercial Agricultural Project (GCAP) which was to improve agricultural productivity and production of smallholder and nucleus farms benefited 14,264 farmers, of which 4,876 (37%) are women. The project helped them surpass the target for yield of maize, rice (under rainfed conditions) and soya in the Savannah Accelerated Development Authority (SADA) zone. GCAP successfully rehabilitated, modernized, and expanded the three irrigation schemes and brought in commercial partners to work with smallholder farmers in the project regions to produce rice, maize, and vegetables all-year round and reduce dependence on rain-fed agriculture. The physical rehabilitation and modernization of public irrigation and drainage infrastructure included two irrigation schemes located on either side of the Volta River: the Kpong Irrigation Scheme (KIS) and the Kpong Left Bank Irrigation Scheme (KLBIS). Both schemes provide water to irrigate 7,391 ha, cropped by 2,835 smallholders (41% female) and several commercial farmers.

The eTransform project supports digital entrepreneurship program through three tech hubs¡ªthe Ghana Tech Lab, the Ghana Innovation Hub in Accra, and the Kumasi Business Incubator in Kumasi.?To date, they have helped boost entrepreneurial skills for over 11,000 young people. In total, 49 startups have been formed, and more than 1,200 businesses have been supported through access to workspace, mentoring and training.?The Ghana Tech Lab alone has trained more than 5,400 youth in digital skills¡ªhalf of whom are female. Over 18,000 youth have been trained at the tech hubs, 51.8% of whom are females. A total of 3,582 jobs have been created, 55,4% of which are filled by females. The establishment of operational infrastructure and support for Cyber Security Authority contributed to Ghana obtaining a higher score (86.69%) and ranking 3^rd in Africa in the 2020 Global Cybersecurity Index ranking Ghana. Under the e-Justice component Case management system has been automated at 50 High Courts in Accra with over 67,583 cases processed through the system across various beneficiary courts. The project has contributed to reducing the average days to process a birth certificate from 15 days to 7 days, it has also helped to reducing the average days to process a company registration from 4 days to 2 days and increased the number of e-services available to the public from 8 to 16. Under the (e-Procurement system), the Public Procurement Authority (PPA) has completed a successful expansion of the eProcurement system or the Ghana Electronic Procurement System (GHANEPS) to 851 entities.

Last Updated: Oct 16, 2024

ľ¹ÏÓ°Ôº remains a trusted partner in Ghana, appreciated not only for its financing but also for its analytical and advisory work.

In Ghana, the World Bank works closely with the UN system, NGOs and bilateral development partners such as the European Union (EU), Denmark, Finland, France, Germany, Japan, Norway, Switzerland, the UK, the USA, Korea, the Netherlands, Canada.  The WBG is an active member of the Head of Cooperation (HoCs) with the objective of promoting regular exchange of information and strategic coordination to avoid duplication of efforts and align resources where possible. The Heads of Cooperation (HoCs) work with the government through the Ministry of Finance, sector ministries and Sector Working Groups (SWGs). The WBG has taken a lead in the areas of macro management (with the IMF) social protection, jobs and skills, education, health, transport, agriculture, urbanization, water, and digitalization.

Last Updated: Oct 16, 2024