Ghana has cut its 2016 economic growth forecast sharply to 4.1 per cent from 5.4 per cent due to lower export prices and irregular oil production, Finance Minister Seth Terkper has said.
Oil output was halted between March and May at the offshore Jubilee field due to a breakdown on a production ship, and the country lost millions of dollars in revenue. It has since restarted at a lower rate.
“These developments have taken into consideration the release of revised GDP figures for 2015, revision of gold production forecasts for 2016-18, and the shutdown of the (oil production vessel) FPSO Kwame Nkrumah,” Mr. Terkper told Reuters on Monday.
GDP growth should pick up between July and September as second oil field, TEN, comes onstream and helps offset the shortfall from Jubilee, he said.
Ghana, which also produces cocoa and gold, is following an International Monetary Fund programme to restore fiscal balance and spur growth, which dropped to 3.9 per cent in 2015 from 14.4 per cent in 2011, a year after it began producing oil. Non-oil GDP was expected to grow by 4.6 per cent, he said.
The government has agreed with local lenders to extend repayment of a GH¢2.2 billion ($560 million) debt owed by the Volta River Authority (VRA) for up to five years, Mr. Terkper said.
“VRA’s credit lines will be opened and if we have problems with gas they can switch more quickly and promptly to light crude under the new refinancing terms,” he added.
The deal could boost industry as the country recovers from a prolonged power crisis that hurt business and angered consumers due to frequent blackouts.
Meanwhile, the Bank of Ghana (BoG) has held its benchmark policy rate at 26.0 per cent, saying the risks to growth and the prospect of inflation were in balance.
“Headline inflation is likely to move within the medium-term target band of eight per cent plus or minus two per cent in the third quarter of 2017, against earlier projections of mid-2017,” BoG Governor Abdul-Nashiru Issahaku told reporters at a news conference in Accra on Monday.
Mr. Issahaku, who took office in April, said anticipated inflows from annual cocoa loans and a planned Eurobond in the last quarter would help boost the bank’s assets in support of the local currency.
“We see the exchange rate remaining stable and not deviating from the current expectations,” he said of the cedi currency, which has depreciated 3.3 per cent to the dollar since January compared to 26 per cent last year.