Ghana’s fiscal deficit will narrow to 4.5 percent of gross domestic product next year from about 10.2 percent this year, according to calculations by Bloomberg based on the budget statement released today.

Fiscal revenue will rise by 33.4 percent, while spending increases 22.8 percent, the statement on the Finance Ministry’s Web site said. The government had previously forecast a deficit of 9.4 percent of GDP for this year.

Ghana’s attempts to narrow the fiscal shortfall, which swelled to 24.2 percent of GDP in 2008, will be aided by the start of oil production in the West African state in the fourth quarter of next year. Ghana National Petroleum Corp. plans to start output at 120,000 barrels a day.

“The government inherited a distressed economy” characterized by a huge fiscal deficit and unpaid bills when it came to power in January of this year, Finance Minister Kwabena Duffuor told parliament. “We were living beyond our means in a manner that we could not sustain.”

In his 2009 budget issued in March, Duffuor cut spending, limiting most ministries to between 50 and 60 percent of the amount they had requested. Parliament later approved his request for an additional 252.8 million cedis ($176 million) in government funds to boost the economy.

Economic growth will slow to 5.9 percent this year from 7.3 percent in 2008, the Finance Ministry said, in line with previous forecasts.

IMF Loan

The International Monetary Fund has predicted growth of between 4 and 5 percent this year after a widening current account deficit led to a slump in the currency.

The cedi weakened 49 percent against the dollar in the 12 months through June. The slump was halted after the IMF agreed to lend Ghana $1.02 billion in July to shore up its currency reserves.

Since then, the currency has risen 2.7 percent against the dollar, helping to cut the inflation rate from a five-year high of 20.7 percent in June to 18 percent in October, the Ghana Statistical Service said on Nov. 13.

Ghana’s debts piled up ahead of the start of production at the offshore Jubilee oil field. The field, discovered in June 2007, may hold as much as 1.8 billion barrels of oil, according to operator Tullow Oil Plc. By 2014, Ghana expects to be pumping 500,000 barrels a day, Deputy Energy Minister Kwabena Donkor said in July.

Ghana neighbors Ivory Coast, the world’s top cocoa producer, and is Africa’s second-biggest gold producer after South Africa.

Source: bloomberg

Tags: budget, deficit, finance, ghana economy