Ghana to get $1.2bn World Bank `lifeline`

The Ghanaian economy is expected to receive budgetary support next month from the World Bank and the International Monetary Fund (IMF) to shore up its finances, Finance Minister Kwabena Duffuor has said.

“Recent negotiations with the multilateral institutions will see an inflow of 1.2 billion dollars (858 million euros) budgetary and project support from the World Bank, and possibly one billion dollars from the IMF for balance of payments support,” Duffuor told reporters.

He said the nation's budget deficit stood at $429.5 million in the first quarter of this year, lower than $801.1 million a year ago.

“The first five months of 2009 have witnessed a positive primary fiscal balance, gradual stabilisation of the cedi (national currency) exchange rate, a sound, well-capitalised and fairly liquid financial sector,” he said.

Inflation dropped marginally to 20.06 per cent in May from 20.56 per cent in April, the first fall in nine months, he added.

But, it was expected to pick up next month, because of a recent hike in the prices of petrol.

The 30 per cent price hike, which took effect from June 5, followed global fuel price increases, officials said.

“This notwithstanding, Ghana will hit a single digit inflation (rate) next year,” the Minister told reporters on Wednesday.

Ghana is the world's second largest cocoa producer after neighbouring Ivory Coast, and Africa's second largest gold producer after South Africa.

The West African country has been struggling with budget deficits and trade imbalances, after the cost of food and fuel imports surged to record highs last year.

The budget deficit stood at a provisional 14.9 per cent of Gross Domestic Product (GDP) in 2008, but President John Atta Mills has announced plans to reduce the deficit to 9.4 per cent of GDP by the end of this year.