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Ghana says it will review $918 million IMF deal

By on January 21, 2017

Ghana’s new government plans to review its $918 million programme with the International Monetary Fund
because it may need more money for its spending plans, a minister-designate said on Friday.

The three-year programme, signed by the previous government in April 2015, imposes strict targets for revenue collection and spending. It aims to reduce inflation, the public debt and the budget deficit and restore rapid growth to Ghana’s economy.

President Nana Akufo-Addo won December’s election in part by promising voters he would give the equivalent of $1 million to each constituency per year for development, build a dam in every village and a factory in every district while cutting taxes.

The Bank of Ghana will likely cut benchmark interest rates by 50 basis points to 25 percent on Monday because of the fiscal deficit overshoot and recent pressure on the cedi currency, said a research note by Standard Chartered.

The government will also restore central bank financing of the deficit, Osafo-Maafo said. Under the IMF programme, Ghana was supposed to present a bill for zero deficit financing from 2015 but parliament instead passed a law allowing 5 percent financing.

“It (the law) was unnecessary and it will be reviewed,” Osafo-Maafo, a former finance minister said.

He said the government will continue to borrow “in a better way” to refinance debt, which stands at 71.8 percent of gross domestic product.

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