IMF warns Ghana’s youth unemployment stubbornly high at 30%, calls for targeted social protection

The International Monetary Fund (IMF) has painted a stark picture of Ghana’s labour market, revealing that youth unemployment—particularly among those aged 15 to 24—remains stubbornly high at approximately 30%, despite recent macroeconomic gains.

In its latest country report on Ghana, the IMF noted that while the economy is showing signs of stabilisation under the Extended Credit Facility (ECF) programme, social conditions remain challenging. The youth unemployment rate, which has hovered around 30% for years, signals a structural weakness that fiscal policy alone cannot address, the Fund warned.

Poverty Declines Modestly, But Gaps Remain

The report acknowledged some progress on poverty reduction. The World Bank estimates that the share of Ghanaians living below the $3-a-day poverty line declined to 37.1% in 2025, down from 38.9% in 2022. This improvement, the IMF said, reflects disinflation—which has eased the cost-of-living burden—and modest growth in the agriculture and services sectors.

However, the Fund stressed that this modest decline is insufficient given the scale of need, and that nearly four in ten Ghanaians still live in poverty.

Government’s Strategy: Labour-Intensive Growth

To tackle unemployment, particularly among the youth, the IMF said the government’s Medium-Term National Development Policy Framework (2026–2029) prioritises growth in labour-intensive sectors such as agriculture, manufacturing, construction, and digital services. The Fund welcomed this focus but cautioned that implementation will be critical, as previous strategies have struggled to translate policy into tangible job creation.

Social Protection Gaps Persist

The IMF was particularly critical of Ghana’s social protection system, describing it as facing “substantial gaps” that require a sustained scaling up of allocations and improvements in programme effectiveness.

While social spending has increased modestly under the ECF programme, the Fund noted that coverage and benefit levels remain low relative to both the needs of vulnerable populations and regional comparators. The flagship Livelihood Empowerment Against Poverty (LEAP) cash transfer programme, even after its planned expansion, will reach only a fraction of the nearly 40% of Ghanaians living below the international poverty line.

“This is a significant gap,” the report stated, underscoring the need for more robust and better-targeted interventions.

Education Gains, But Quality Lags

On education, the IMF noted improvement in access, with primary enrolment rates rising, but it warned that secondary school enrolment remains below Sustainable Development Goal (SDG) targets. More concerning, the Fund said, is that quality indicators—including learning outcomes, teacher-to-student ratios, and infrastructure availability—lag behind peer countries in Sub-Saharan Africa.

The report argued that without significant investment in educational quality, the youth labour force will continue to lack the skills demanded by a modernising economy, perpetuating the unemployment cycle.

Call for Protecting the Vulnerable

The IMF concluded with a strong recommendation: in the context of ongoing fiscal discipline, global economic uncertainty, and continued utility tariff adjustments that hit low-income households hardest, strengthening social safety nets is not optional but essential.

“Implementing well-targeted social policies is crucial to protect the most vulnerable from the adverse impacts of macroeconomic shocks,” the Fund said, adding that the government must strike a delicate balance between fiscal consolidation and social investment.

Background and Implications

The report comes at a time when Ghana is navigating a fragile economic recovery following debt restructuring and IMF-backed reforms. While inflation has eased from its 2022 peaks, utility tariff hikes and tax adjustments continue to erode household purchasing power.

The stubbornly high youth unemployment rate has become a political flashpoint, with opposition parties and civil society organisations repeatedly calling for more aggressive job creation measures. The IMF’s acknowledgment of the scale of the problem adds weight to those calls, while also framing the challenge as one that requires not just economic growth, but targeted, well-funded social policies.

The government has yet to issue an official response to the IMF’s findings, but the report is expected to inform the upcoming 2027 budget deliberations as policymakers grapple with competing demands for fiscal discipline and social welfare expansion.