Ghana's economy to grow by 5% – IMF

The International Monetary Fund (IMF) projects Ghana’s economy to expand by four to five per cent this year, boosted by investments linked to the offshore oil sector, which will come on stream in 2011.

The economic growth rate by the end of 2009 was between three to four per cent.

Mr Peter Allum, IMF Mission Chief, who made the observation said Ghana had made good progress to strengthen fiscal institutions and addressing the high public administration costs, which exceeded levels in peer countries, had been less rapid.

He said the country need to take care in implementing the new public pay structure to ensure that it did not exceed budget provisions for staffing costs.

The IMF Mission was in Ghana to conduct discussions for the first and second reviews under the fund’s Extended Credit Facility.

They met Finance Minister, Dr Kwabena Duffuor, Bank of Ghana Governor, Mr Kwesi B. Amissah-Arthur, other senior officials, members of the Parliamentary Finance Committee, representatives of the private sector and civil society organisations.

Mr Allum said fiscal management remained Ghana’s main challenge, although the budget deficit was reduced to 9.7 per cent of GDP in line with programme targets.

“For 2010, IMF supports the government’s revised deficit target of eight per cent of GDP, and welcome plans to further reduce the deficit to three to five per cent of GDP in 2011-2012, buoyed by oil-related revenues of five percentage points of GDP or more,” he said.

Under the projections, public debt is expected to rise to 62 per cent at the end of 2010 before declining to 2011-12 as the fiscal deficit is reduced.

“There is little room for manoeuvre within these budget plans. Expenditure ceilings are tight, and the majority of Ghana’s accumulated domestic expenditure arrears equivalent to seven per cent of GDP will be repaid only in 2011-2012,” he said.

Mr Allum said Ghana’s main challenges for 2011 relates to its move to oil producer status, adding that the pending oil and gas revenue management bill is expected to ensure that petroleum revenues and related spending are transparently reflected in the budget.

Source: GNA