International rating agency Fitch has said it will be “challenging” for Ghana to stick to the 3-year staff level agreement it has reached with the International Monetary Fund (IMF) worth $940 million.
[contextly_sidebar id=”mRI8QR36lvyRzr46pusDkhPCyr2wEsun”]The programme will seek to restrain, prioritise government’s public expenditure, increase tax collection and strengthen the effectiveness of the Bank of Ghana’s monetary policy.
Fitch described the targets as “ambitious” and believes ahead of the 2016 elections, it will be difficult for the government to stick to the programme.
Already, the Finance Minister Seth Tekper has vehemently rejected claims that Ghana’s current economic woes are because of excessive spending in the 2012 election year.
It was however quick to say that the agreement will “ease short-term government and external financing pressures.”
This according to Fitch will also “provide an impetus for donors to re-engage with Ghana, providing much needed foreign currency.”
Government has agreed to cut expenditure in response to lower oil prices, as part of its deal with the IMF.
Fitch forecasts a deficit of 8% of GDP in 2015 but IMF has projected that the deficit will narrow to 3.5% of GDP by 2017.
Fitch thinks that projection is “too optimistic” given the deepening electricity crisis, which could drag growth lower, and the likely pressure that the upcoming elections will exert on spending.
The IMF forcasts the budget deficit narrowing to about 7.5% of GDP in 2015, down from the 9.5% in 2014.
This is higher than the deficit target of 6.5% announced in the 2015 budget in December and reflects the impact of lower oil prices and weaker growth.
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By: Nana Boakye-Yiadom/citifmonline.com/Ghana