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Ghana plans to review $918 million IMF deal

Ghana plans to review $918 million IMF deal

Ghana

Ghana’s new government is planning to review its $918 million programme with the International Monetary Fund as it seeks more funds for its spending plans.

The three-year programme, signed by the previous government in April 2015, imposes strict targets for revenue collection and spending.

It aims to reduce inflation, the public debt and the budget deficit and restore rapid growth to Ghana’s economy.

President Nana Akufo-Addo has promised to cut taxes, a proposal which is likely to set the country in a collusion course with the IMF.

Economists say the Fund cannot change its overall programme objectives but interim targets can be modified in the light of performance between each IMF review.

As a result, the new government could negotiate less onerous conditions if it finds that targets set for the end of 2016 were not met.

In an indication that this may happen, the new government says the budget deficit stood at around 8 percent at the end of 2016, higher than the 5.3 percent targeted under the programme.

Analysts say the Bank of Ghana will likely cut benchmark interest rates by 50 basis points to 25 percent in the next monetary policy review because of the fiscal deficit overshoot and recent pressure on the cedi currency.

The government is also aiming at restoring central bank financing of the deficit

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