IMF REVISES GHANA’S GROWTH FORECAST FROM 6.3 TO SLIGHTLY ABOVE 5.8%

The International Monetary Fund (IMF) has revised its 2017 growth forecast for Ghana to 5.9%, below the government’s budgetary target of 6.3% for the year.

The projection is based on developments in the first five months of the year and assumptions about the impact that domestic and global economy on growth prospects, the Resident Representative of the fund in the country, Ms Natalia Koliadina, said. The new forecast is slightly above the 5.8% that the fund initially projected for the economy. Just like the March projection, the fund anticipates that the current forecast will be driven by the recent recovery in oil production.

Non-oil growth will, however, be subdued by anticipated fiscal consolidation, Ms Koliadina said in an email interview. She explained that the consolidation, which has no “alternative,” was needed to correct the fiscal imbalances caused by election year excesses. While siding with the fund that non-oil gross domestic product will be subdued, the Head of the Economics Department at the University of Ghana, Legon, Prof. Peter Quartey, said he was confident overall gross domestic product (GDP) would hit 6% this year.

“I think we will do something in the range of 6%,” he said, explaining that the fund’s projections could be a reflection of depressed revenue inflows in the first quarter of the year. Although the government was projecting to gross GH¢9.7 billion in the first four months of the year, data showed that the country realisedGH¢8.3 billion, reflecting a defict of GH¢1.4 billion.

While emphasising the IMF’s support for that decision, the Resident Representative explained that “the prioritisation of the projects and their phased implementation would allow the authorities to keep spending within the budget envelope and to avoid excessive borrowing.”