Ghana economic update: preserving the future - rising to the youth employment challenge

Ghana’s economy rebounded from the COVID-19 slowdown, growing by 5.4 percent in 2021, but the recovery is already facing global headwinds. Despite attempts by the government to roll back fiscal support, consolidation was held back by budget rigidities, debt service obligations, and revenue mobilization challenges, keeping the fiscal deficit one of the highest in the region. Debt sustainability is a key concern, as Ghana faces elevated public debt and financing needs, but limited access to international capital markets. To meet its financing needs, Ghana has had to turn to expensive domestic private borrowing, increasing the pressure on the financial system. The authorities have announced ambitious medium-term fiscal objectives but their political feasibility has come into question, they may not be sufficient to stop debt accumulation, and they provide for minimal buffers in case of slippages. If Ghana can control the major risks it faces, GDP growth is expected to reach 5.0 percent in 2022 and to average 5.6 per year over 2022-2024.