Ghanaian President John Mahama has ordered his government to open talks with the International Monetary Fund (IMF) on a programme to help stabilise the economy and halt a slide in the cedi currency, officials said on Saturday.
Mahama told a meeting of his economic advisors on Friday that urgent measures should be taken to prop up the cedi, which has fallen by around 40 percent against the dollar this year, placing it among the world’s worst performing currencies.
The West African country, which became the first sub-Saharan African country outside South Africa to tap the Eurobond market in 2007, is struggling to tame large budget and current account deficits, turning investor sentiment against the onetime frontier market darling.
With Ghana looking to issue a new $1.5 billion Eurobond toward the end of this month, some bond market participants said the backing of an IMF programme would be necessary to reassure investors over the stability of the currency.
“The president has directed that we open negotiations with the IMF,” Finance Minister Seth Terkper told Reuters, adding the talks with the IMF would be focused on resolving specific problems rather than a general assessment of the economy. “This programme is not going to be like any other programme that countries have with the IMF.”
“Ghana is currently in a transition as a lower-middle income country. It’s in that context that we will be negotiating with the IMF,” Terkper said by telephone on route to Washington for a U.S.-Africa summit next week that Mahama is attending.
Deputy Finance Minister Casiel Ato Forson told Reuters the government had already informed the IMF of its decision to sign a new programme. Ghana’s last three-year $600 million IMF programme ended in 2012, two years after the country started oil production.
Forson said Ghana would look for concessions from the Fund to help its stabilisation efforts and would continue to tap the bond market and other commercials sources of credit to support expenditure and economic growth.
Despite being a major exporter of gold, oil and cocoa, Ghana posted a current account deficit of 12 percent of GDP last year as demand for imports boomed amid economic growth of 7 percent. Ghana is also grappling with a wide budget deficit, which stood at 10 percent of GDP last year, undermining its reputation for fiscal responsibility.
Reuters
