Ghana’s Finance Minister, Dr. Cassiel Ato Forson, has disclosed that the country has failed to meet key performance indicators required for the upcoming fourth review of its IMF-supported program in April 2025. The government fell short on crucial fiscal benchmarks, including the primary balance, inflation rate, and social protection spending—a development that could lead to stricter IMF conditions in the coming months.

Most notably, inflation surged to 23.8% in December 2024, far exceeding the government’s budget target of 15% and the IMF’s central target of 18%. This deviation has triggered discussions under the Monetary Policy Consultation Clause, which could result in adjustments to Ghana’s economic program.

The country’s fiscal health also worsened, with the primary balance deteriorating to a deficit of 3.9% of GDP, a stark contrast to the 0.5% surplus originally targeted. The government’s expenditure overruns—total spending exceeding budgetary provisions by 27.1%—suggest continued difficulty in enforcing fiscal discipline, despite ongoing austerity measures and debt restructuring.

Ghana’s debt service obligations remain a major concern, posing a significant challenge to economic stability and fiscal planning. Over the next four years, the government faces GH¢150.3 billion in domestic debt service payments, alongside an additional $8.7 billion in external debt service obligations. These payments are set against a backdrop of stagnant revenue growth, mounting expenditure pressures, and a constrained borrowing environment following the country’s recent debt restructuring. The burden of these obligations is further exacerbated by their concentration in 2027 and 2028, creating the risk of a severe fiscal squeeze in the coming years. Without sufficient revenue growth or access to affordable credit, Ghana’s ability to meet these commitments will depend heavily on fiscal discipline, increased domestic revenue mobilization, and possible further negotiations with creditors.

Compounding this issue is the government’s struggle to settle GH¢67.5 billion in arrears owed to contractors and suppliers, a situation that has far-reaching implications for liquidity in key sectors of the economy. Many businesses that rely on government contracts, particularly in construction, infrastructure, and service delivery—are facing significant cash flow challenges, leading to project delays, layoffs, and even potential business closures. This liquidity crisis creates a negative feedback loop in which delayed government payments reduce the ability of private firms to meet their financial obligations, including paying employees and servicing their debts. Over time, this could lead to weakened private sector growth, lower job creation, and increased pressure on the financial sector, as banks exposed to affected businesses may experience rising non-performing loans.

The government’s failure to meet IMF targets is not just an abstract fiscal concern—it has tangible consequences for everyday consumers, businesses, and the overall market environment in Ghana. As the economy continues to struggle under these financial pressures, several key issues will shape the economic realities for individuals and brands alike.

With inflation soaring at 23.8%, Ghanaian households will continue to experience rising costs of essential goods and services, further eroding their purchasing power. Prices of basic food items, transportation, rent, and utilities have already been on an upward trajectory, and this trend is expected to persist as businesses pass on increased costs to consumers. Imported goods, in particular, will become even more expensive due to the continued depreciation of the Cedi, making everyday household items less affordable. Consumers will be forced to make difficult spending choices, cutting back on discretionary expenses such as entertainment, personal care, and luxury goods in favor of necessities. This shift will significantly impact retailers, service providers, and brands that rely on consumer spending in non-essential categories.

To address the worsening fiscal deficit and regain credibility with the IMF and international lenders, the Ghanaian government may be forced to increase taxes and cut public sector spending. This could take the form of higher VAT rates, increased corporate taxes, or new levies on essential goods and services, further squeezing both businesses and consumers. Additionally, cuts in government spending on infrastructure, education, healthcare, and social programs could result in reduced public services, delayed salary payments for public sector workers, and slower economic activity overall. If such austerity measures are implemented, they could lead to reduced disposable income levels, lower business confidence, and weaker consumer demand, ultimately slowing down economic recovery.

For businesses, the impact of Ghana’s economic challenges and fiscal instability will be far-reaching. The combination of higher inflation, weaker consumer spending, and policy uncertainty will create a difficult operating environment for both local and multinational brands. Businesses that depend on imports, such as retailers, manufacturers, and tech companies, will struggle with rising costs due to currency depreciation and increased import duties. Moreover, the uncertainty surrounding government policies and potential tax hikes could deter new investments, particularly in industries that require long-term capital commitments. Investors, both local and foreign, may hold back expansion plans, delay new projects, or even consider relocating investments to more stable markets. The resulting slowdown in economic activity could further depress job creation and wage growth, creating additional hardship for households.

As disposable incomes shrink and financial pressures mount, consumer spending patterns will shift significantly. Many households will prioritize affordable, value-driven products, making it imperative for brands to adapt their pricing, promotions, and product offerings. Businesses that previously catered to a middle- or high-income customer base may need to restructure their offerings to appeal to a more cost-conscious market. For instance, retailers could see a greater demand for budget-friendly product lines, while service-based businesses may need to offer flexible payment plans or loyalty programs to retain customers.

Additionally, the economic downturn may drive increased consumer preference for locally produced goods and services, as imported alternatives become prohibitively expensive. This presents an opportunity for domestic brands to gain market share by positioning themselves as affordable, high-quality alternatives to imported products. Businesses that can leverage local sourcing, cost efficiencies, and innovative pricing models will be best positioned to navigate these economic headwinds.