Updated: March 1, 2021
The International Monetary Fund (IMF) said in Washington DC on Thursday that the economy of Ghana remains favorable, boosted by new potential oil discoveries and mining.
Growth is expected to increase from 6.3 percent in 2018 to 7 percent in 2019, and to average 5 percent in the next few years.
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IMF said consumer price inflation has stayed close to the center of the target band in recent months, despite the pass-through from Cedi depreciation and higher utility tariffs, and is expected to decline to around 6 percent over the medium term. The international reserves remain stable due, in part, to external borrowing.
According to the government of Ghana, deficit is projected to reach 4.7 percent of GDP in 2019, driven by lower-than-expected revenues, spending on flagship programs, and unexpected security outlays caused by emerging security challenges in the region.
“After including energy and financial sector costs, this corresponds to an overall deficit of 7 percent of GDP in 2019,” IMF said, adding that Central government debt is expected to increase to 63 percent by the end of 2019, driven in part by “exceptional energy and financial sector costs”.
The 2020 budget is expected to deliver a deficit (excluding energy and financial sector costs) of 4.9 percent of GDP, equivalent to an overall deficit of 6.4 percent of GDP.
At current policies, the overall deficit is projected to stabilize over the medium-term to about 5 percent of GDP, IMF said.
But the economy of Ghana is not without risks. Spending pressures, especially with the 202 election, financing challenges – possibly triggered by global conditions and larger-than-expected energy and financial sector costs, are some of the risks the administration of Nana Akufo-Addo should watched out for.
On the upside, over the medium-term, Ghana could benefit from new oil discoveries, higher cocoa prices, rapid diversification, driven by the government’s industrialization efforts, and the potential for domestic revenue mobilization reforms, IMF said.
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