The International Monetary Fund (IMF) has commended government’s digitization drive, saying it will have a significant impact on Ghana’s economy.
In a statement issued by the IMF, following its assessment of the impact of Coronavirus on the Ghanaian economy, and what the government is doing to recover, the Fund listed digitization as one of government’s positive initiatives which will play a key role in Ghana’s post covid-19 economic recovery.
“Directors emphasized that the authorities’ structural transformation and digitalization agendas are critical to support the recovery,” the IMF noted.
Ghana’s digitalization, the IMF opined, will reduce corruption, enhance service delivery and boost revenue in this critical period.
“The structural transformation can be complemented by the ongoing energy sector review, diversification in tourism, and the digital transition, which has the potential to reduce corruption, boost tax revenues, and improve service delivery.”
Vice President Dr. Mahamudu Bawumia who has spearheaded government’s acclaimed digitalization drive, has often spoken of the positive impact digitization will play on the Ghanaian economy, in the same manner the IMF has highlighted.
Government’s digitization drive has seen the massive digitalization of several government services, including the ports, NHIA, application of passports and drivers’ licences, registration of businesses, among many others.
Ghana’s successful digitization drive has been built on a solid foundation of a remarkable delivery of over 15 million digital national identification cards in 4 years, digital addressing system and mobile money interoperability, which has made it possible for Ghanaians to be able to access government services online and pay for same using their mobile phones.
The IMF assessment revealed in detail, how the pandemic has affected Ghana’s economy, which it said was growing remarkably before the pandemic.
It however, added that Ghana’s economy is seeing encouraging signs of recovery as a result of pragmatic steps by the government, with digitization as a key player.
The IMF has outlined in detail how the global coronavirus pandemic devastated Ghana’s economy 2020.
In its statement the Fund highlighted how the Ghanaian economy, which was growing at a rate of 6.5% in 2019, was badly hit by the pandemic, setting it back to a growth of 0.4, a loss of 6.1%, thus having a telling effect on food prices and poverty rate.
“Ghana was hit hard by the COVID-19 pandemic,” the IMF said in its assessment.
“The pandemic had a severe impact on economic activity. Growth slowed to 0.4 percent in 2020 from 6.5 percent in 2019, food prices spiked, and poverty increased. The fiscal deficit including energy and financial sector costs worsened to 15.2 percent of GDP, with a further 2.1 percent of GDP in additional spending financed through the accumulation of domestic arrears.”
The statement added that, “Public debt rose to 79 percent of GDP. The current account deficit widened slightly to 3.1 percent of GDP as the decline in oil exports was partially offset by higher gold prices, resilient remittances, and weaker imports.”
On the Cedi, the IMF assessed that it remained stable, despite the effects due to pragmatic steps by the Central Bank.
“The Ghanaian Cedi remained stable against the US dollar, partly due to central bank intervention, and gross international reserves remained at 3.2 months of imports.
“External and domestic financing conditions tightened considerably at the start of the pandemic, but have improved since, and Ghana successfully returned to international capital markets for a US$3 billion Eurobond issuance in March 2021.”
After over a year of devastation, the IMF’s assessment has commended Ghana’s economic management for “encouraging signs” towards economic recovery.
“An economic recovery is underway. Growth is expected to rebound to 4.7 percent in 2021, supported by a strong cocoa season and mining and services activity, and inflation remaining within the Bank of Ghana target.”
“The current account deficit is projected to improve to 2.2 percent of GDP, supported by a pickup in oil prices, and gross international reserves are expected to remain stable.”
“The 2021 budget envisages a fiscal deficit of 13.9 percent of GDP in 2021, including energy and financial sector costs, and a gradual medium-term fiscal adjustment which would support a decline in public debt starting in 2024.”
3rd wave threat
The IMF, however, cautions that the positive outlook is subject to “significant uncertainty, including from new pandemic waves” as well as risks associated with large financing needs, which will increase public debt.