Runaway fiscal deficit and rising inflation are threatening to derail steady economic growth in Ghana, the International Monetary Fund (IMF) has said.
Toujas-Bernaté, who led an IMF mission to Ghana, noted the country continues to face significant domestic and external vulnerabilities that are putting medium-term prospects at risk.
According to the mission, growth is projected to decelerate to 4.5 per cent in 2014 from 7.1 per cent recorded in 2013 while inflation is expected to reach an average of 15 per cent this year.
Fiscal deficit is expected to remain elevated at around 9.7 per cent of GDP, driven by weak revenue performance, a large wage bill and substantially rising cost of debt service.
The external current account deficit is projected to narrow to 10 per cent of GDP as imports declined substantially due to slower growth and a large depreciation of the currency, while export performance remained weak.
In September, the issuance of a $1 billion Eurobond and the Cocoa Board (Cocobod) successfully raising $1.7 billion for the financing of a projected excellent cocoa crop were positive developments. Nonetheless, gross international reserves will remain at a low level.
“The mission had constructive and candid discussions with the authorities who showed an appreciation of the risks associated with these imbalances and vulnerabilities,” said Toujas-Bernaté.
Early this year Ghana unveiled a set of measures designed to put the country back on track, while preserving growth momentum.
While important, these measures have not managed to turn the financial situation around as a result of some implementation delays which have set back the objectives of putting public debt on a more sustainable path and reducing inflation.
International Monetary Fund (IMF)