Ghana urgently needs to narrow its budget deficit, the International Monetary Fund said on Friday, after the 2016 gap came in at 9 percent of economic output rather than the Fund’s target of 5.25 percent.
The inflation rate is also coming down more slowly than expected, the IMF said at the end of a visit to the country that followed a change of government. Annual inflation stood at 15.4 percent in December.
Ghana started a three-year programme with the Fund in April 2015 that aims to reduce inflation, the deficit and public debt, stabilize the currency and boost growth.
“Ghana’s economy continues to face challenges. While the estimated economic growth of 3.6 percent in 2016 exceeded our target of 3.3 percent, the decline in inflation has been slower than expected,” the Fund said in a statement after a visit led by mission chief Joel Toujas-Bernate.
The country exports gold, oil and cocoa and until 2014, when a broad-based decline in commodity prices began, boasted one of Africa’s most dynamic economies.
The new government has outlined a plan to restore fiscal discipline, broaden the tax base, rein in spending by individual ministries, limit allocations to statutory funds and cut tax exemptions.
The Fund said Ghana’s fiscal problems required strong efforts of consolidation and the government also needed to urgently address a problem of debt among state enterprises.