IMF says Ghana’s annual deficit to fall below 5.7% of non-oil GDP

The International Monetary Fund (IMF) is optimistic that Ghana can meet its annual deficit below the current target of 5.7% of non-oil gross domestic product (GDP).

According to the IMF, Ghana’s fiscal outcomes for the first half of 2011, together with preliminary data for the third quarter, indicates a strong performance and that all quantitative performance criteria and indicative targets for end-June 2011 were met.

“Fiscal outcomes for the first half of 2011, together with preliminary data for the third quarter, indicate a strong performance. All quantitative performance criteria and indicative targets for end-June 2011 were met, and an annual deficit below the current target of 5.7 percent of non-oil gross domestic product (GDP) should be feasible,” said the Fund in a statement October 25, 2011 after reviewing the country’s economy.

It adds that “The lower deficit reflects an impressive increase in tax revenues, where reforms are beginning to bear fruit, but also a shortfall in foreign-financed capital spending.”

The wage bill, IMF said on the other hand, is now expected to absorb a larger share of public expenditure and non-oil GDP. “This reflects both the sizeable costs of moving public sector employees onto a uniform pay structure (the “single spine”) and a 2011 base pay increase that was well above the rate of inflation.”

A senior economist at IMF, Alfredo Baldini told Reuters that the Fund estimates non-oil growth for Ghana this year to be at 6-7% with current account deficits remain manageable.

Ghana’s 2011 second quarter growth rate is 16.4% after it was revised from 33.5%, according to a statement signed by Dr. Grace Bediako, Government Statistician October 18, 2011.

The Ghana Statistical Service (GSS) also revised the quarter-on-quarter GDP to a negative 3.1% in the second quarter from a fall on the provisional 4.3% announced earlier.

By Ekow Quandzie