The International Monetary
Fund (IMF) said that Ghana experienced weak economic growth in the first half of 2013.
Head of an IMF mission Christina Deseking, which was in Ghana between September 11 and September 17, said this in a statement issued at the end of the team’s exercise.
Deseking, who said the weakening was due to energy disruption and high real interest rates, stated that the team met with critical economic stakeholders in Ghana during the mission.
“Economic growth weakened in the first half of 2013 due to energy disruptions and high real interest rates
“Following the subsiding of the energy problems, we expect full-year growth of about seven per cent, compared to eight per cent in 2012,’’ she said.
She said that while Ghana’s medium term economic prospects remained strong, there were possible short term risks arising from sizeable fiscal and external imbalances
“Inflation has risen temporarily above 11 per cent as a result of the significant fuel price adjustments earlier in the year
“It is projected to increase to more than 13 per cent of GDP in response to much weaker gold and cocoa prices and ongoing fiscal pressures,’’ she said.
The IMF official said that the economy remained exposed to risks from a potentially deteriorating external environment and global financial market pressures.
“A preliminary assessment of fiscal performance during the first seven months of the year reveals significant challenges consistent with a slow-down in economic activity.
“Revenue has fallen short of expectations, and overruns in the wage bill, electricity subsidies, and high interest payments on public debt are creating fiscal pressures,’’ she said.
She described the government’s decision of a mid-year adoption of revenue measures and the re-introduction of the national stabilisation and import levies as right steps.
Deseking, however, stated that it would be difficult for the government to keep the deficit below 10 per cent of GDP.
“The mission agreed with the authorities on the need to reduce subsidies and tackle the problems in the energy sector as well as the re-instatement of the automatic fuel price adjustment mechanism.
“The restoration of electricity tariffs to cost-recovery levels will reduce fiscal risks and provide the needed space for higher social spending and critical infrastructure,’’ Deseking said.
She said that the mission also encouraged the government to strengthen its ongoing efforts to improve revenue collection as well as continue its public financial management reforms.