Last year Ghana’s fiscal deficit measured in at 12.1 percent, much more than the 6.7 targeted percentage. Now, according to Ghana Business News, the International Monetary Fund is urging the country to restructure its fiscal plan and ramp up economic growth.
The ‘ambitious fiscal consolidation plan’ will help to combat debt and external imbalance increases, which affect the flow of the country’s capital.
“Directors saw a need for more ambitious fiscal consolidation over the medium term to ensure sustainable debt dynamics, allow the buildup of official reserves, and lower the current account deficit,” that IMF said in the Ghana Business News report.
Trimming spending that comes from subsidies, and finding ways to increase investment are both strategies that IMF directors encourage.
Ghana Business News also reported that debt recovery for Ghana is likely as resources such as oil and gas production contribute to financial stability.
Last month, Reuters reported that Ghana would cut fuel subsidies to begin closing the deficit. Ultimately, prices would see a slight increase as taxes would be passed on to consumers.
“By this, the government has completely removed subsidies on petrol, gas oil and LPG (liquefied petroleum gas), which form about 95 percent of domestic (petroleum) products, effective 1st June,” Alex Mould, National Petroleum Authority (NPA) chief executive told Reuters.
In 2012, petrol subsidies accounted for $500 million according to the same report. In February, the NPA raised prices on fuel as subsidy spending was expected to increase 150 percent.
IMF directors had been urging Ghana to cut excessive fuel subsidy spending since last year. However, prior to national elections — when the country lost President John Atta Mills — plans to cut fuel subsidy spending and to reexamine wasteful spending were delayed, according to Reuters.