New Ghana government aims at deficit, inflation in first budget
3/2/2017 8:28:51 PM
Shooting for a 6.5% budget deficit in 2017.
Ghana aims to reduce its budget deficit and inflation in 2017, Finance Minister Ken Ofori-Atta said on Thursday in a budget speech designed to show how the new government plans to stabilise the economy.
It was to be done with provate sector growth, he said.
The new government plans to cut the budget deficit to 6.5 percent of gross domestic product in 2017 from 8.7 percent on a cash basis last year. The yearly inflation target is a reduction to 11.2 percent 13.3 percent in January, Ofori-Atta told parliament.
The $40 billion economy would grow at 6.3 percent in 2017 Ofori-Atta said in his first budget since the New Patriotic Party took power in January following a sweeping election win.
The government of President Nana Akufo-Addo has promised to create jobs, stimulate private sector growth, cut taxes, and promote rural development through measures that include building a dam in every village and a factory in every district.
"The budget will set the pace for job creation and accelerate growth by encouraging the private sector. We will shift the focus of economic management from taxation to production," Ofori-Atta said in a speech of nearly three hours.
The government inherited an economy in worse shape than it expected and said it would review a $918 million programme with the International Monetary Fund that has so far failed to restore balance to national finances.
Those problems coupled with lower prices for exports of gold and oil and frequent power blackouts slowed growth to an estimated 3.6 percent in 2016, its lowest level in decades.
The government will restore a petroleum hedging strategy funded through proceeds from the Price Stabilization and Recovery Account to protect oil exports against commodity price shocks, he said.
The speech was often interrupted by opposition deputies who at one point held up signs saying "419 budget", a slang reference to financial scams.
Ghana's medium to longer-dated dollar-denominated bonds came under some pressure across the curve during the speech.
The 2022 issue hit its weakest level in more than a week and fell nearly half a cent, according to Tradeweb data, while the 2026 bond slipped to levels last seen mid-December.
Ghana is one of sub-Saharan Africa's most prolific issuers, tapping international capital markets every year since 2013. The cedi currency, which has traded at historic lows for weeks, pared earlier losses during the speech to stand at 4.7325 at 1230 GMT.