IMF tells Ghana to further reduce deficit
Ghana must reduce her budget deficit and remain firmly committed to macroeconomic stabilisation over the next two years to create prospects for investment and accelerated growth, IMF Deputy Managing Director, John Lipsky said in Accra on Wednesday.
“Despite recent improvements, the budget deficit is still high,” Mr. Lipsky told a press conference at the end of a two-day official visit to Ghana.
Ghana’s budget deficit is projected to decline to 7.5 per cent of GDP in 2010 from 9.5 per cent.
However, Mr. Lipsky said this must be reduced further if the country was to avoid the risk of using its revenue from oil to fund the deficit instead of investing in productive sectors.
In this direction, he called for strengthening budget implementation to create fiscal space for oil production revenue to be used for poverty reduction programmes.
“Ghana has to create some space by reducing the fiscal demand on the economy,” he added.
Mr. Lipsky said the global crisis was waning, sparking increase optimism but there were still signs of fragility.
He said the emerging markets had shown a lot of resilience with investor confidence surging.
On the country’s economic prospects, Mr. Lipsky said the prospects were encouraging buoyed by strong demand for cocoa and gold, which had helped to cushion the country from the worst effects of the global recession and for an expected 2010 modest economic recovery.
He said the only way to sustain the progress was to make strong investments in human development and capital infrastructure adding, such investments would instil long-term confidence in investors.
Mr. Lipsky pledged IMF’s continuous technical assistance to Ghana to help restore confidence and sustain the macroeconomic gains so far achieved.
In July 2009, the IMF Executive Board approved a loan of 602.6 million dollars to help the country tackle budget imbalances.
It also provided a Special Drawing Rights of 450 million dollars to further prop up the country’s official reserve position.