Ghana loses Middle-Income Country status; now classified as Low-Income Country by IMF

Ghana has lost its status as a Middle-Income Country (MIC).

This follows the reclassification of the country as a Low-Income Country (LIC) by the International Monetary Fund (IMF) in its April 2021 Fiscal Monitor Report.

According to the IMF, it no longer recognises Ghana as a MIC despite achieving the status in 2010.

The downgrade of the country’s income status, is likely to be attributed to the nation’s poor state of its fiscal economy.

Current fiscal deficits excluding costs incurred in the financial and energy sectors, hovers around 11.7 percent of GDP, included, fiscal deficits will increase to around 15 percent of GDP.

Public debt to GDP has also crossed the 70 percent benchmark reaching 74.1 percent of GDP and expected to continue on an elevated path going forward with projections of debt crossing 80 percent by the end of 2021.

At the moment, Ghana spends 46 percent of its total revenues and grants on interest payments of loans taken, the remainder of the revenues are used on wages and compensation payments which are usually insufficient and as such government has to borrow to finance other critical expenditures leaving no room for investments or buffers building.

In the report, fellow African countries Gabon, Swaziland, Namibia, Congo and Angola were classified emerging and middle-income countries.

Find below the economy groupings made by the IMF: