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Ghana-IMF aid deal likely April 2015, says Fitch


Business News of Friday, 5 December 2014

Source: Starrfmonline.com

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Fitch Ratings Ltd has predicted Ghana and the International Monetary Fund may not reach an agreement on aid until April and the oil-producing country will struggle to meet revenue targets in 2015.

The West African country has turned to the IMF for a bailout to salvage an ailing economy as its currency struggles to stabilise against major currencies such as the US dollar and the Euro.

Bloomberg quoted the director of Fitch Carmen Altenkirch to have said a target to reduce the gap to 6.5 percent of gross domestic product in 2015 from 9.5 percent is “exceptionally ambitious.”

“I’ve penciled in a figure of 8 percent,” she said at a conference today in London. “The real challenge for them will be raising revenue at a time when the economy isn’t performing well.”

Lower earnings from exports and higher spending weighed on the budget in West Africa’s second-biggest economy and added pressure on the cedi, the continent’s worst-performing currency this year. Rising debt, power shortages and soaring inflation prompted President John Dramani Mahama to open the door to IMF aid in August.

The government would probably finish talks with the lender by February, James Klutse Avedzi, chairman of the finance committee in Parliament, said on Nov. 19.

“The first time, all things going well, that we’re likely to see an IMF program is April next year,” Altenkirch said, without giving details. “If they don’t have an IMF program, they won’t be able to issue another Eurobond. Then, you’re going to get a very large drain on reserves.”

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