Ghana May Accept IMF's Conditions

Dr Kwabena Duffuor, Finance and Economic Planning Minister

Finance and Economic Planning Minister, Dr Kwabena Duffuor says Ghana may agree on terms with the International Monetary Fund (IMF) on a $1 billion loan within the next couple of days.

'An agreement is likely to be reached today or tomorrow,' the Minister said in an interview in Accra.

He said the Washington, D.C. based lender will then review the agreement before setting a date for a final decision.

Dr Duffuor said as part of the agreement, the IMF wants Ghana to take better control of the government-employee wage bill and reduce oil subsidies.

Ghana said on May 7 it was in talks with the IMF about borrowing not less than $1 billion over the next three years.

The world's second-largest cocoa producer needs the funds to deal with a budget deficit that reached 14.9 per cent of the nation's annual output in 2008 and a domestic currency, the cedi, which has dropped 37 per cent against the dollar in the past 12 months.

The West African nation's budget deficit stood at 2.8 percent during the first five months of the year, Dr Duffuor said last week.

Most ministries have had their budgets cut to between 50 percent and 60 percent of the funds they requested because the 'fiscal imbalance was so big so we had no other option.'

The budgetary measures have also helped stabilise the cedi, said Dr Duffuor, a former governor of the Bank of Ghana.

The cedi weakened 1.4 percent against the dollar during the last four weeks, having weakened by 17 per cent since the start of the year. The Ghanaian currency was 0.2 percent stronger at $1.4913 as of 5:00 p.m. on last Tuesday in Johannesburg.

Dr Duffuor said while Ghana is unlikely to match last year's growth rate of 7.3 percent, the country is likely to achieve growth rate of 5.9 per cent this year.

The World Bank said last week that its board will probably approve a $300 million loan to Ghana on June 30, a part of an interest-free, three-year $1.2 billion package.

Ghana's neighbours the Cote d'Ivoire, the world's largest cocoa grower and is Africa's second-biggest gold producer, after South Africa.