The International Monetary Fund has classified Ghana as a Low-Income Developing Economy in its April 2021 Fiscal Monitor.
13 African countries were however ranked as Emerging and Middle-Income Economies.
Despite the World Bank ranking Ghana as a lower middle income economy, the Fund’s Fiscal Monitor does not recognized the country as a middle-income country.
However, countries such as Angola, Gabon, Swaziland and Namibia which Ghana is said to be doing better than, are classified as Emerging and Middle-Income Economies by the Bretton Wood institution. It appears the covid-19 pandemic had been unfavorable to the country, impacting negatively on its finances.
The country’s positioning may be due to the poor state of its fiscal economy which require tougher measures going forward in order to bounce back to a better state.
The fiscal deficit to Gross Domestic Product of 11.7% is a major worry, whilst the primary balance that is the difference between revenue and expenditure excluding interest payments is also a concern. Additionally, the rising debt which the nation will spend about 46% of its revenue to pay investors this year, is also a headache to managers of the Ghanaian economy.
Economist and Finance Lecturer at the University of Ghana Business School, Dr. Lord Mensah tells Joy Business he’s not surprised about the country’s positioning in the Fiscal Monitor classification by the IMF.
“Those categorization was purely on projections and I think it has to do with how the countries will respond to the impact of covid-19 on their economies in terms of expansion, when the various initiatives that are being taken to fight the covid-19 start kicking in.”
“You understand that over the past few months, the covid-19 vaccine has started being injected across the globe. But the question is when the economies start picking up, what are the tools or the finances you can leverage to expand. And so if you look at the countries that have been categorized into Emerging Markets and Middle Income Economies, clearly their base and their buffers are very good compared to those in the low income developing countries and I’m not surprised Ghana finds itself in there.”
For Advanced Economies, countries such as Australia, Belgium, Estonia, Iceland, Israel, Macoa, Malta, Singapore, Taiwan, United Kingdom and United States are in that category.
African countries classified as Emerging and Middle-Income Economies are Algeria, Angola, Cape Verde, Egypt, Equatorial Guinea, Swaziland, Gabon, Mauritius, Morocco, Namibia, Seychelles, South Africa, and Tunisia.
Ghana, Benin, Burkina Faso, Cameroon, Haiti, Honduras, Kenya, Lesotho, Niger and Nigeria are some countries branded as Low-Income Developing Economies.
The World Bank however classifies Ghana’s economy as lower middle-income, based on the nation’s per capita income.
IMF Fiscal Monitor.pdf
The following groupings of economies are used in the Fiscal Monitor. Data for all the economies can be found here: https://www.imf.org/external/datamapper/datasets/FM
Advanced Economies Emerging Market and Middle-Income Economies Low-Income Developing Countries G7 Countries
Australia Albania Afghanistan Canada
Austria Algeria Bangladesh France
Belgium Angola Benin Germany
Canada Antigua and Barbuda Bhutan Italy
Cyprus Argentina Burkina Faso Japan
Czech Republic Armenia Burundi United Kingdom
Denmark Aruba Cambodia United States
Estonia Azerbaijan Cameroon
Finland Bahamas Central Africa Republic
France Bahrain Chad
Germany Barbados Comoros
Greece Belarus Congo Democratic Rep.
Hong Kong Belize Congo, Rep.
Iceland Bolivia Cote d’lvoire
Ireland Bosnia and Herzegovina Djibouti
Israel Brazil Eritrea
Italy Brunei Ethiopia
Japan Bulgaria Gambia, The
Korea Cape Verde Ghana
Latvia Chile Guinea
Lithuania China Guinea-Bissau
Luxemburg Colombia Haiti
Macao Costa Rica Honduras
Malta Croatia Kenya
Netherlands Dominican Kiribati
New Zealand Dominican Republic Kyrgyz Republic
Norway Ecuador Lao
Portugal Egypt Lesotho
Peurto Rico El Salvador Liberia
San Marino Equatorial Guinea Madagascar
Singapore Eswathini Malawi
Slovak Republic Fiji Mauritania
Slovenia Gabon Moldova
Spain Georgia Mozambique
Sweden Grenada Mynamar
Switzerland Guatemala Nepal
Taiwan Guyana Nicaragua
United Kingdom Hungary Niger
United States India Nigeria
Source: Joy Business
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