Ideas to Action:

Independent research for global prosperity

X

Views from the Center

Feed

I had the pleasure of visiting Ghana again this month to discuss the possible implications for the country of its new middle income status, the result of rapid growth and (a rather significant 63%!) statistical adjustment.  In particular, I was there to talk about Ghana’s looming graduation from the World Bank’s International Development Association (IDA) window.   This is crucial for Ghana, since IDA is the country’s #1 donor and has been for much of the past 30 years. 

Listen here for my podcast and the full paper on implications will be available soon (email me if you want an early draft), but the main takeaways are:

  • When Ghana formally graduates, principal repayments on its $1.6bn in IDA debt stock will immediately double.
  • Ghana seems likely to qualify for the hard IBRD window, so its net flows from the World Bank as a whole may not fall—and could even rise.
  • The other donors will who still provide >$1 bn/yr will soon start treating Ghana differently as both a middle-income country and a significant oil producer. But so too will private investors who will be drawn by a wealthier market.
  • These trends will put a high premium on managing a medium-term aid exit, getting the oil sector and business climate reforms right, and developing other sources of domestic revenue.

The very positive take-away from my trip is that the level of public discussion about these issues is extremely high in Ghana, in large part owing to the active public policy community in Accra and a refreshing open-mindedness from policymakers (like Deputy Finance Minister Seth Terkper who graciously chaired my seminar) to engage with such groups. A particular shout out (and thank you) to my hosts, the impressive Institute of Economic Affairs, Ghana’s oldest independent think-tank. The IEA regularly holds seminars on pressing public policy issues – they even sponsor the country’s televised presidential debates!

Related Topics:

Disclaimer

CGD blog posts reflect the views of the authors drawing on prior research and experience in their areas of expertise. CGD does not take institutional positions.