he vice president, John Dramani Mahama says if efforts are not made to deal with the country’s deficit, the country will be sliding down the dangerous path of economic failure of other countries like Greece, warning that the country’s deficit is the most dangerous threat to the economy.

Mahama who was speaking at the event to honour the country’s Most Respected CEO and Company over the weekend said the country has a deficit of over $1.45 billion in the petroleum sector alone.

“The Ministry of Finance has paid $550m out of this,” he said. According to Mahama, in the non-petroleum sector, the country owes between $700 million and $1 billion.

He said the government was trying to refinance these debts, by making efforts to raise money from a consortium of banks.

In December 2009, the London-based Economic Intelligence Unit (EIU) forecast that Ghana’s deficit will narrow to 8.4% in 2010 before the country starts to earn income from oil production due to begin in June 2010. But now the production date has been moved to December.

The EIU in its Country Report on Ghana for 2009 also said Ghana’s economic policy environment will remain challenging in 2010, even though the global economic environment is expected to improve slowly after the recession in 2009.

According to the report the recent decision by the government to accept financial assistance from the IMF and the World Bank is indicative of the challenges that the government sees ahead.

The Deputy Managing Director of the International Monetary Fund (IMF), John Lipsky also urged the country to reduce her budget deficit and remain firmly committed to macroeconomic stabilisation over the next two years to create prospects for investment and accelerated growth.

“Despite recent improvements, the budget deficit is still high,” Mr. Lipsky told a press conference at the end of a two-day official visit to Ghana.

Ghana’s budget deficit is projected to decline to 7.5 per cent of GDP in 2010 from 9.5 per cent.

However, Mr. Lipsky said this must be reduced further if the country was to avoid the risk of using its revenue from oil to fund the deficit instead of investing in productive sectors.

In this direction, he called for strengthening budget implementation to create fiscal space for oil production revenue to be used for poverty reduction programmes.

“Ghana has to create some space by reducing the fiscal demand on the economy,” he added.