Ghana’s economic growth in 2016 will slow to the lowest rate in more than two decades as uncertainty over the resumption of oil and gas output at a key field weighs on the country’s prospects for next year, according to the International Monetary Fund.
West Africa’s largest economy after Nigeria will likely expand 3.3 percent this year, the slowest since 1994, after growing 3.9 percent in 2015, the IMF said in a statement on its website on Tuesday. The country’s growth forecast for 2017 is 7.4 percent and 8.4 percent for the next year, the Washington-based lender said.
The IMF issued its forecasts for Ghana after the country’s gross domestic product expanded at 2.5 percent in the three months through June as defects on the FPSO Kwame Nkrumah, the vessel used for production, storage and offloading crude at the Jubilee oil field, adversely affected crude oil and gas output. The government said in July that growth will accelerate to between 4.1 percent and 4.3 percent.
“The outlook remains difficult and the balance of risks is tilted to the downside,” the IMF said in its statement. “Uncertainty regarding repair operations at the Jubilee oil field pose a significant risk.”
Ghana turned to the IMF in April 2015 after lower prices for its gold, cocoa and oil exports caused debt to balloon and its currency to decline against the dollar. Regular power cuts have also weighed on the economy.
“The recent re-emergence of power shortages due to disruption in gas supply is adding to downside risks,” the IMF said.
The fund revised Ghana’s budget-deficit forecast for 2016 to 5.2 percent of GDP from 4.8 percent in May, due to oil-revenue shortfalls. Inflation will rise to 17.5 percent by the end of the year, from 16.9 percent in August, Joel Toujas-Bernate, the IMF’s mission head in Ghana, told reporters on a video conference call from Washington on Tuesday.
Consumer price increases will fall to the Bank of Ghana’s target of between 6 percent and 10 percent in the second half of 2017, the IMF said.
The “central bank’s monetary policy committee rate should come down from next year as inflation eases,” Toujas-Bernate said. The bank held rates at 26 percent at its last MPC meeting on Sept. 19.
The country’s ratio of debt-to-GDP will remain below 68 percent in 2016, from 72 percent in 2015, Toujas-Bernate said. A continued decline “will go a long way to restore investor confidence and enhance public finance,” Toujas-Bernate said.