Cash Strapped Ghana May Seek Aid From IMF To Seal Budget Deficit

Cash Strapped Ghana May Seek Aid From IMF To Seal Budget Deficit

Written by Moses Dzawu  | From Bloomberg

The second-best dollar-bond rally in Africa this month is signaling growing speculation that Ghana will seek aid from the International Monetary Fund as the government struggles to close its budget deficit.

Dollar debt from the West African exporter of gold, cocoa and oil returned 3.5 percent in May, the most after Morocco among nine countries on the continent tracked by Bloomberg indexes. Emerging markets earned 2.2 percent. The yield on Ghana’s August 2023 bond slid 108 basis points since March 25, when former central bank Deputy Governor and opposition politician Mahamudu Bawumia said a bailout may be needed.

Ghana’s fiscal gap is seen at 9.1 percent of gross domestic product this year, a Bloomberg survey of economists shows, as tax revenue missed targets, gold and cocoa earnings fell and state workers got raises. While President John Dramani Mahama said May 13 the nation seeks a “homegrown strategy” to solve its economic ills and hasn’t made a decision on the IMF, he’s also facing a slumping currency that is fueling inflation.

“Most international portfolio managers I’ve spoken with believe the government should sign a deal with the IMF,” Samir Gadio, an emerging-markets strategist at Standard Bank Group Ltd.’s London unit, said in an e-mailed response to questions yesterday. “By having the IMF directly involved, the fiscal consolidation agenda will possibly look more credible.”

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