Photographer: Pius Utomi Ekpei/AFP via Getty Images

Ghana to Miss Deficit Target as Crude Delays Weigh on Income

  • Election expenses, energy-debt repayments higher than planned
  • Country won’t draw on central bank funding this year

Ghana will miss its budget-deficit target for 2016 because of disappointing oil output and higher-than-expected spending on elections and energy-industry debts, Finance Minister Seth Terkper said.

West Africa’s second-biggest economy will miss its fiscal shortfall aim of 5.3 percent of gross domestic product by 1.5 to 2 percentage points, Terkper told reporters Tuesday in the capital, Accra. Ghana’s shortfall in 2015 was 6.3 percent of GDP, he said.

“The higher deficit was on account of FPSO shutdowns resulting in lower crude and gas output,” he said, referring to the outage in the second quarter of an offshore oil field operated by Tullow Oil Plc.

Setting aside extra money for the 2016 elections and upfront payments for the restructuring of debts accumulated by state-owned energy companies were higher than initially planned, he said. Power utilities had arrears on 2.6 billion cedis ($617 million) of loans when the government started payments, according to the Ghana Association of Bankers.

Terkper spoke in what will likely be his final address as finance minister after the ruling National Democratic Congress lost this month’s presidential and parliamentary votes. The New Patriotic Party under the leadership of Nana Akufo-Addo will assume power on Jan. 7. Ghana agreed to an almost $1 billion International Monetary Fund program in April last year to help narrow the budget deficit and arrest weaknesses in the currency.

Budget Deficit

The budget deficit exceeded 10 percent of GDP from 2012 to 2014.

The cedi weakened 1.8 percent to 4.21 per dollar at 10:12 a.m., bringing its loss since January to 5.2 percent. The yield on Ghana’s dollar bond maturing in 2023 fell one basis point to 8.345 percent.

The country’s debt stabilized at between 68 percent to 70 percent of GDP in the past three years while the government won’t draw on any funding from the central bank in 2016, in accordance with the IMF’s criteria, Terkper said. Ghana’s sinking fund, created by Terkper for the payment of debts, has a balance of $300 million, Deputy Finance Minister Cassiel Ato Forson said at the same event.

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