Govt's fiscal adjustment is progressing well – IC Research

According to IC Research, Ghana government's fiscal adjustment is progressing well, surpassing initial expectations for the 2023 fiscal year.

Initially targeting a fiscal adjustment equivalent to 3.8% of Gross Domestic Product (GDP) with a primary deficit of 0.5% of GDP in the 2023 Budget, the government exceeded projections. Instead of a deficit, the primary balance recorded a surplus of 0.4%,

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IC Research estimates that this robust performance translates into a fiscal adjustment of 4.7% of GDP in 2023, surpassing the anticipated cumulative adjustment of 5.1% over three years.

The IMF also confirmed significant improvement in the primary fiscal balance for 2023, with projections indicating a primary surplus of 0.5% in 2024. This trajectory, according to IC Research, suggests that the cumulative adjustment target of 5.1% by the end of 2024 is achievable, considering one full year of the program remaining.

The research firm notes that barring any election-related disruptions, this favorable outcome provides leeway for the government to further increase the primary surplus in the program's final year. This would effectively drive down public debt ratios, ensuring a downward trajectory in the medium term.