ABSTRACT: The study examined the influence of external bailouts on Ghana’s macroeconomic stability using Vector Error Correction Model and time series data covering 2008 to 2021. It was determined that there is a long-term causal association between external bailouts and macroeconomic stability in Ghana, and that foreign direct investment, gross domestic product, and imports all have a long-term relationship with external bailouts. In addition, it was discovered that there is no short-term causal relationship between the variables. As foreign bailouts continue to increase in the near term, it has no combined or individual influence on macroeconomic variables, but in the long run, it has both a combined and individual effect on all macroeconomic variables in the model. In order to improve macroeconomic stability, policymakers are recommended to reduce their reliance on external bailouts, accumulate foreign reserves, and expand agricultural production and industrialization.

KEYWORDS – External Bailouts, FDI, Macroeconomic Stability, Gross Domestic Product, Imports