IMF Sees Bigger Ghana 2016 Deficit Target Slippage Than Forecast

ACCRA (Capital Markets in Africa) – Ghana will miss its budget-deficit target for 2016 by a bigger margin than the government’s forecast due to weak revenue collection and higher-than-planned capital spending, according to the International Monetary Fund.

West Africa’s second-biggest economy will probably miss the Washington-based lender’s budget-deficit forecast of 5.2 percent of gross domestic product by 2 to 3 percentage points, the IMF said in an e-mailed response to questions. Last month, former Finance Minister Seth Terkper said the slippage would be 1.5 to 2 percentage points of the government’s fiscal shortfall target of 5.3 percent.

The IMF will evaluate Ghana’s economic performance in the coming weeks as part of an almost $1 billion bailout agreed to the country in April 2015. The lender will be meeting for the first time with the government of President Nana Akufo-Addo after his victory over former leader John Mahama in elections last month.

The slippage “means that stronger efforts will be required to achieve the targeted fiscal consolidation,” the IMF said in its comments. “The pace of fiscal consolidation will be a part of discussions.” The budget deficit exceeded 10 percent of GDP from 2012 to 2014.

The IMF hasn’t yet revised Ghana’s economic growth forecast for 2016 of 3.2 percent, even though estimates for the first three quarters of the year “suggest stronger than expected” growth, it said. The government’s last forecast was for growth of at least 4.1 percent.