Ghana is on track to report a budget deficit below its target this year because of more disciplined government spending, President John Dramani Mahama said.
The gap will fall to 7.2 percent of gross domestic product, Mahama said in an interview broadcast on Joy FM on Wednesday. Minister of Finance Seth Terkper set a target of 7.3 percent last month.
“We have taken some tough decisions,” Mahama said. “We are seeing a turnaround. The second-quarter figures look even better than the first quarter. Fiscal consolidation is taking place.”
Ghana is battling to jumpstart economic growth because of surging inflation, the highest borrowing costs in Africa and a currency that has whipsawed between the best and worst performer on the continent this year. The second-largest economy in West Africa will expand 3.5 percent this year, the slowest pace in two decades, according to the government.
Ghana agreed to terms with the International Monetary Fund for a loan of about $1 billion this year to stabilize the currency, which has fallen 18 percent against the dollar this year, and narrow the budget gap.
The cedi dropped 1.1 percent to 4.055 per dollar at 11:25 a.m. in Accra, the capital.
The nation’s currency is stabilizing and inflation will slow before the end of the year, pushing borrowing costs lower, Mahama said. Inflation quickened to a five-year high of 17.9 percent in July from 17.1 percent in June, the statistics service said on Wednesday.
The government has made difficult decisions that were necessary, including ending fuel subsidies, he said. The budget gap for the first five months of the year was 1.9 percent, below the target of 3.4 percent, the Ministry of Finance said said on Wednesday.
Ghana is “coming out of the woods,” Mahama said. “We are being more disciplined with government expenditure and working to increase revenues.”