Ghana’s economy in trouble, to end 2023 at nearly 3 weeks of import cover

Ghana’s net international reserves will end 2023 at nearly three weeks of import cover (0.8 month), the 2023 International Monetary Fund Regional Economic Outlook Report (Sub-Saharan Africa) has disclosed.

Again, the report said Ghana’s reserves stood at a little above two weeks (0.6 months) of import cover in 2022.

This is contrary to the Bank of Ghana’s Summary of Economic and Financial Data that the country’s reserves in 2022 was estimated at 2.7 months of import cover.

The implication is if foreign inflows are to stop today, the country’s economy will be in severe trouble, as there are only a few dollars in the reserves for balance of payment transactions.

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This makes the IMF bailout ($3 billion loan) critical to the country’s economic stability going forward.

The report also said the country’s reserves is expected to grow to about 1.7 months of import cover in 2024.

In Sub-Saharan Africa, Zimbabwe (0.2 month), South Sudan (0.5 month) and Ethiopia (0.6 month) are the only countries expected to record import cover lower than Ghana.

The Bank of Ghana in its March 2023 Summary of Economic and Financial Data said Ghana’s net international reserves improved slightly to $2.62 billion, about 2.8 months of import cover in February 2023.

This was from the $2.24 billion recorded in December 2022, about 2.7 months of import cover.

The country’s Balance of Payment at the end of February 2023, however, stood at a deficit of $3.63 billion, approximately 5% of Gross Domestic Product.