In a mission assessment of Ghana’s economy, the Washington-based Fund noted that despite the country’s strong economic potential, short-term stability risks have risen.
“Energy sector problems could curtail growth,” the IMF said April 12, 2013 in a statement.
Ghana in recent times has been rationing power leading to some industries incurring extra-cost of providing electricity to power their operations. The power cuts started around October last year and government has assured that it will resolve the problem with urgency.
The country’s economic growth is currently led by the services sector. Indeed Ghana’s economy grew at 7.9% in 2012, the Statistical Service said April 10, 2013 after revising GDP provisional estimates. The growth, according to the GSS was led by the services sector which most often relies on electricity.
In nominal terms, the revised GDP estimate for 2012 was GH¢73.1 billion compared with provisional estimates of GH¢71.8 billion for the same period announced in September 2012.
Apart from the energy crisis, the other instance of possible slowing of Ghana’s growth, the IMF mentioned was government’s excessive domestic borrowing. The Fund stated that domestic borrowing is raising the cost of credit to the private sector.
“Both factors have been identified as key growth constraints in Ghana,” it stated.
The IMF mission’s still positive assessment of the economy is contingent on the authorities’ resolve to confront these challenges decisively.
The Fund said it shares the Bank of Ghana’s views on keeping a tight monetary policy stance, for the time being. Both actual inflation and inflation expectations have risen recently, with upside risks from the sharp increase in government borrowing, it added.
The IMF team is expected to prepare a staff report on Ghana’s economy and is tentatively scheduled to be discussed by the IMF’s Executive Board in mid-June 2013.
By Ekow Quandzie