Over the past few months, there has been a lot of hype around IMF and Ghana and our news portals have made a great deal of analysis on Ghana’s involvement with the IMF. Though some pandits handled the issue politically, the few without political bias can prove without prejudice that Ghana indeed has a history as far as IMF is concerned. As investors, we may not be focused on economic history. What is important to us is where our money( funds ) during this periods have made the most returns.

To set the ball rolling, Ghana has a history of Going to the IMF 16 times. This is a significant length of time to gather data. This data has not been utilized to benefit the investing public. A good thought to get you started is: Throughout this 16 times Ghana has been to the IMF, which investments have made the most returns? Will history repeat itself, to what extent is this significant?

In this write up, we explore returns on the stock market and fixed income securities with focus on treasury bill. This we know is the benchmark to all investments in Ghana, hence, it’s best we explore these assets first.


The International Monetary Fund (IMF) is an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its purpose is to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

 The IMF was formed in 1944, started on 27 December 1945, at the Bretton Woods Conference.

On Wednesday, 6 July, 2022, a team from IMF led by Carlo Sdralevich met with the government of Ghana to negotiate its bailout. This is the 17Th time Ghana has visited the IMF for loans to support the economy.

According to government of Ghana, the current economic crises can be attributed to Covid-19 and Russia-Ukraine Crisis which has in recent times lead to the skyrocketing of Ghana’s inflation resulting in the shoot up of goods and services and a rise in the standard of living of Ghanaians.

Below is a chart representing transactions between Ghana and the IMF in millions of cedis.

Ghana’s Transactions with the IMF


Despite the efforts of Ghana’s central bank to raise its Monetary Policy Rate (MPR) to 22% to curb inflationary pressures and promote macroeconomic stability, the nation’s inflation is still on the rise.

In June, Ghana recorded its highest inflation rate in almost 19 years (since December 2003) according to Bloomberg data. Ghana’s annual inflation rate accelerated to 31.7% in July of 2022, from 29.8% in June, breaching the upper ceiling of the central bank’s target band of 6% to 10% for eleven months.

According to reports, the Russia-Ukraine war has aggravated so many economic woes. Among these is the rise in the country’s inflation which can be attributed to the upsurge in the prices of; fuel, gasoline, fertilizer, and food.


Inflation rate has since 1995 been seen to reduce drastically within the first four years after support from the IMF and then rise again.

The funds from IMF for 2022 will help reduce the current rise in inflation being experienced by the country. Looking at the trend, investors can expect inflation to decrease after the intervention of IMF on Ghana’s economy.

Inflation and IMF

The red spots indicate the years within which Ghana went for support from the IMF.


The T-BILL interest rate has a positive correlation with inflation. Thus, as inflation rises the T-bill rate also rises with the inflation.

Government’s effort to reach out to the IMF for a bailout will help improve the economic outlook of the country and subsequently lead to a reduction in inflation. All things being equal, this will result in the fall of the T-bill rate.
As it can be observed in the period 2003, 2009 and 2015( the most recent transactions with IMF), 91 day T-bill rate fell drastically. As we look forward to this happenings , investors can take positions now.

IMF and T-bill rate


The debt-to-GDP ratio is the metric comparing a country’s public debt to its gross domestic product (GDP). By comparing what a country owes with what it produces, the debt-to-GDP ratio reliably indicates that country’s ability to pay back its debts.

Funds provided by the IMF increases the public debt of the nation, this will in effect increase the debt to GDP ratio of the country.

Ghana’s debt to GDP ratio increased by 49.09% as at the end of 2021, since Ghana’s last visit to the IMF for support. Ghana’s rising debt to GDP ratio puts Ghana at a higher risk of defaulting in its debt to creditors, and hence creditors will seek higher interest when lending. Nevertheless, if Ghana’s debt to GDP ratio is not managed then this may deter creditors from lending money altogether in the near future. Also, a rising debt to GDP ratio may signal a future rise in taxes and this has a negative impact on the investment decisions made by investors. Currently, the debt to GDP ratio is about 83%.

A bailout from the IMF will help curb economic pressures in the country. However, mismanagement of the funds from the IMF could result in the country facing severe economic downturns.

Ghana has recorded an annual rise in its Debt to GDP ratio from 2012 to 2021 as visualized by the graph below.

Debt to GDP Ratio


The Stock market has been observed to perform better after a bailout from the IMF with exception of 2003.

In 2015, the market recorded a negative return of 11.57%, after the bailout the market performed worse by recording a negative return of 15.33% but the market rose to hit 52.73% which was the highest the market has recorded since 2014 to date.

Currently, the market has a negative return of 11.22% (as at 26th August 2022) which can be attributed to the current economic crises being faced by the country.

Since 1990, Ghana has visited the IMF five times and three out of these visits, the GSE returns is seen to have an upward look the year succeeding the IMF bailout. In the years 1995, 1999 and 2009 it can be noted that the GSE performance increased the year following the bailout by; 7.49%, 31.77% and 78.73% respectively.

However, in 2015, the GSE returns further decreased by 3.56% in the year following the bailout but in 2017 the market returns increased to 52.73%.

Averagely, the bailout from IMF is seen to have a short run positive impact on the market returns. The graph below shows the yearly returns of the Ghana Stock Exchange from 1990 to August 26, 2022.

GSE-CI returns and IMF

Below is a plot of the daily returns of the GSE-CI from 2012 to July 2022 using python

GSE Daily Returns


Rising inflation has a negative impact on the GSE returns. Inflation affects equities in three ways, that is, corporate profits, consumer spending and the overall economy.

Inflation increases prices of inputs to production process. Due to this companies experience lower profit margins, which negatively impacts and stock prices.

Also, inflation reduces the perceived present value of cash flows from stocks as perceived by investors. Stock prices, at least in the short term, are largely a function of investor expectations, and if they perceive the present value of future cash flows to be lower, they will act.

Monthly Inflation and GSE Returns

The chart above shows the monthly inflation against stock market returns from 2012 to August 26, 2022. It can be observed that trying to time the market on a monthly basis will likely not make you much returns since most of these monthly returns are below inflation. Ideally, holding over 3 years should give you a better option as period end.


Since 2012, Ghana has maintained its treasury bill rate above that of inflation, providing investors with some returns. However, the Russia-Ukraine war in recent times has caused a downturn in the global economy causing a rise in inflation, with Ghana’s inflation for the past few months rising above the treasury bill rate. In June 2022, Treasury bills have surged to an eight-year high to catch up with the hiking inflation with 28% and even 36% in the past few weeks.

91 day T-bill Rate and Inflation


Currently, Ghana’s economy is facing a major economic downturn, hobble by widening current account and budget deficits, rampant inflation (31.7%) and a depreciating currency.

Standard and Poor’s credit rating for Ghana stands at CCC+ with a negative outlook on the nation’s creditworthiness. Fitch’s rating for Ghana was last reported at CCC with n/a outlook. This indicates that it is substantially risky to invest in Ghana and this has made it unattractive to foreign investors since they do that at their own risk.

The central banks’ effort to increase the Monetary Policy Rate (MPR) by 500 basis points within the year to help curb inflation has been futile. This could be attributed to the fact that the rise in inflation is as a result of the rise in oil and gas prices and the rise in the prices of food, which are key drivers of inflation.

According to reports, negotiations with the IMF could result in Ghana being eligible for up to USD 3 billion under the Extended Credit Facility and Extended Fund Facility.  The programme could extend over three years, the support being conditional on the government meeting certain economic and policy targets.

As investors, Fixed income funds will experience a sharp decline as observed in the data. Grab one now.
The stock market will provide good grounds to accumulate huge margins in the next few years. But only investors who have a minimum of three (3) years investments timeframe can engage stocks to maximize returns while others look at fixed income funds. Some good investment grade stocks include CAL Bank, GCB Bank, Benso Oil Palm Plantation (BOPP), Access Bank… etc.. Engage us for valuation and predictions if you need more insight.

Source:  World Bank, The IMF, Bank of Ghana, Ghana Stock Exchange, Bloomberg.

Mariama Quarshie
Project Lead
Mob: 0550291667
Kenneth Adu

Mob: 0248556177


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