Ghana is set to consult with the International Monetary Fund (IMF) as it seeks to redress its dwindling fiscal fortunes by issuing a $1.5 billion Eurobond, said Hanna Tetteh, the West African country’s Foreign Minister on Friday.
“We don’t want to go for an IMF bailout. What we want to do, and what we are going to do, is to open consultations with the IMF,” Tetteh told Reuters at the sideline of the just concluded US-Africa Summit.
If the talks do happen and Ghana gets endorsement for a reform of its fiscal program, it will give an international credibility stamp to Ghana’s reform plan and will give its planned Eurobond issuance a good chance of being successful.
Ghana’s economy, which once epitomised strong economic growth of Africa has suffered a reversal of fortunes in recent times, with the cedi sinking nearly 40 percent to 3.7 against the dollar, making it the worst performing currency in Africa, and indeed the world in 2014.
As if the newly discovered oil was a curse with an initial boost to GDP growth of above 8 percent in five years, the country ran fiscal deficit equal to 10.1 percent of GDP in 2013. Inflation now averages at about 15 percent as the country groans under its economic misfortune.
Ghana has taken measures to save its sinking economy including a raise in VAT and slashing of subsidies on utilities and fuel. Despite these tough measures, Tetteh acknowledged that Ghana still needed IMF’s backing to help steady the ship.
The West African country will be hoping its discussion on measures being put in place would be fruitful and encourage the IMF to assist the West African nation as its economy seeks a lifebuoy.
Source: Ventures Africa