Reforms for Special Drawing Rights (SDRs) Financing in Ghanas Economic Recovery

The Ghanaian economy recorded its worst performance in the last three decades in 2022, evidenced by unprecedented levels of macro-economic imbalances. Although there were signs of fiscal slippages towards the end of 2019, the structural weaknesses in the countrys fiscal domain were exposed and weakened by the triple crisis covid-19 pandemic, Russia-Ukraine war and rising climate shocks. In addition, unsustainably high levels of public debt, especially rising external debt, has led to a steady increase in the amount of government revenues spent on servicing these debts. Spending an increasing share of the economys revenues on servicing debt has resulted in declining shares for public investment in infrastructure and social services (see Figure 1 and 2). This appears to have had the tendency to induce the government to borrow more. In May 2023, the country was classified as debt distress by the IMF.