Ghana’s $3bn IMF Bailout Faces Test as New Policy Instrument Challenges Election‑Year Spending Discipline

Context When the IMF approved Ghana’s $3bn bailout in 2023, the country was grappling with inflation above 50%, a collapsing cedi, and a historic default on much of its external debt. Three years later, macro‑indicators have improved: the 10‑year Eurobond yield traded at 9.8% in early 2024, down from 14.2% a year earlier, and the Ghana Stock Exchange Composite Index (GSECI) rose 3.4% year‑to‑date, reflecting renewed investor confidence. The total market capitalisation of the GSE is approximately $6.5 bn.

Key Facts The IMF’s original Extended Fund Facility set targets for a primary surplus of 0.5% of GDP and a debt‑to‑GDP ratio below 70% by 2026. The newly introduced PCI adds quarterly reviews of fiscal aggregates, including a ceiling on election‑related spending and a requirement to publish a medium‑term debt strategy. Ghana’s government defaulted on external debt for the first time in decades during the crisis, a fact that underscores the stakes of meeting these conditions.

What It Means The PCI tightens the link between disbursements and observable fiscal restraint, aiming to prevent the pre‑election spending spikes that previously pushed Ghana into crisis. If the government adheres to the PCI’s spending caps, analysts expect the cedi to remain within a 5‑6 GHS per USD band and inflation to stay below 25% through 2025. Slippage could trigger a review of the programme and renew pressure on sovereign spreads.

What to watch next Monitor the PCI’s first quarterly review scheduled for mid‑2025, the outcome of the 2026 presidential election campaign spending, and the trajectory of Ghana’s Eurobond yields as indicators of market confidence in the programme’s durability.