The International Monetary Fund (IMF) has stated that Ghana is making progress in its economic management but cautioned that the country will have to ride on a bumpy path to economic recovery.
Acording to her, the problems remained with developments in the oil and banking sectors coupled with fiscal tightening which could make economic conditions difficult.
“In the context of the much higher public debt level, a replay of the past spending splurges in an election year would greatly heighten the risk of a full-blown economic and financial crisis and undermine Ghana’s development progress”, Ms. Pattillo said.
Ghana saw sustained GDP growth above eight per cent on its exports of gold, cocoa and oil until 2013 but has since seen a slump partly because of lower global commodity prices and a fiscal crisis that forced the country to secure an aid deal with the IMF last year.
Ms Pattilo said the challenge the country was facing was due to commodity price slowdown and an underperfoming revenue sector and how to meet a fiscal target that required maintaining strict control of spending, especially in the run up to the Decembber general election. “Avoiding any related spending overruns as happened in the past will be critical in the coming months,” she stated.
Ms Pattilo mentioned other constraints to include, “domestic financing, which still poses a threat to the economy.”
Analysts say the country was on target to halve its fiscal deficit this year after its US$918 million aid deal with the IMF.
The government issued a bill to eliminate Central Bank’s financing of the budget deficit in line with the requirements of the deal but on August 2, 2016, Parliament passed an amendment to the bill, allowing financing of up to five per cent.
Ghana’s public debt eased to 63 per cent of GDP in May this year from 72 per cent at the end of 2015, while consumer inflation dropped to 16.7 per cent in July from 19 per cent in January.
An international rating agency Moody’s Investors Service has also affirmed Ghana’s issuer and senior unsecured rating at B3 and changed the outlook of the country’s economy to stable from negative.
The agency cited the significant fiscal deficit reduction and implementation of institutional reforms over the past year under the umbrella of the three-year IMF programme which started in April 2015 as a major factor.
It also welcomed a reduced government external liquidity risk after the successful issuance of a US$750 million Eurobond in September. This is aimed at redeeming the maturity of the remaining US$400 million October 2017 Eurobond.