Ghana’s finance minister will face challenges of curbing a budget deficit that widened the most in four years and warding off a ratings downgrade even as the president promises spending on schools, roads and hospitals in West Africa’s second-biggest economy.
Seth Terkper, the deputy who was promoted to minister in January, will present the country’s fiscal plan for 2013 to lawmakers tomorrow at about 10 a.m. Accra time. The budget gap jumped to 12.1 percent of gross domestic product last year, almost double a target of 6.7 percent, the Bank of Ghana said Feb. 13. Two days later, Fitch Ratings cut its outlook on Ghana’s debt to negative from stable.
“The government will be keen to cut the deficit significantly,” Angus Downie, head of economic research at Ecobank Transnational Inc. in London, said in an e-mailed response to questions. “Its ability to do so is hampered by some of the election manifesto spending pledges that were made, which include more schools, clinics, housing, roads and power amongst others.”
Spending climbed before an election in December, which was won by John Dramani Mahama who reiterated promises made during the campaign in a speech to lawmakers on Feb. 21. Rising wages for government workers and higher fuel subsidies added spending pressure as the country earned less than anticipated from exports of crude oil.
Ghana’s currency, the cedi, was Africa’s third-worst performer against the dollar in 2012, weakening 14 percent, according to data compiled by Bloomberg. It’s gained 0.7 percent this year and traded little changed at 1.9175 per dollar by 5:04 p.m. on March 1. The yield on Ghana’s 8.5 percent Eurobonds, due October 2017, eased 6.3 basis points, or 0.06 percentage point.
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