4% budget deficit not overly ambitious- IMF

IMF says its proposal to Government to reduce the budget deficit from the current figure of about 9 percent to 3.7 percent by 2017 is not overly ambitious as some have suggested.

Suggestions have been made by sources close to Government that the measure may be too ruthless and resulting in shocks to the economy and hardship to Ghanaians.

However speaking at a press conference in Washington DC at the going IMF/WORLD BANK Spring meetings, Director of the African Department at the IMF, Antoinette Sayeh explained the proposal is in line with solutions aimed at addressing current challenges facing Ghana's economy and necessary to assure that the country does not find itself right back where it started.

“Ghana needs a considerable fiscal adjustment”, she said, “it needs to front load that adjustment to deal with the very dire situation it has been in the course of the last two to three years as a result of very large fiscal and current account deficits and reduced growth”.

According to her, Ghana's track record in fiscal adjustment has not been the best in the past and it is very important that this problem be addressed as soon as possible and in a way that minimizes the risk of the IMF programme going off track as the country enters an election year in 2016.

Government has struggled over the years with its expenditure, recording almost twin budget deficits over the last three years.

Ghana approached the IMF in August 2014 for a programme, which many say will be a bailout from severe economic challenges.

The IMF approved the programme on April 3, 2015 and the first tranche of the bailout funds hit the central bank last week.

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