Ghana growth forecast hints at tough IMF deal in 2015

Subject

Ghana growth forecasts for 2015.

Significance

Growth is officially expected to slow sharply to 3.9% this year -- the lowest in over a decade. This is due partly to long-standing macroeconomic imbalances, which last year produced the present high interest rate, high inflation environment. However, austere IMF-mandated cuts in government expenditure are likely to exert the greatest pressure on growth, although they may be necessary to stave off a deeper economic crisis.

Impacts

• A Fund programme appears necessary to reassure donors; the EU last month suspended budget support over governance concerns.
• Given low oil prices, President John Mahama will struggle to fulfil his 2012 election promises such as expanding secondary schools.
• Another likely growth downgrade could prove politically costly for Mahama at general elections in 2016.