The International Monetary Fund (IMF) has projected a fiscal deficit of 10 per cent of gross domestic product (GDP) this year for Ghana.

Christina Daseking, leader of the IMF mission to Ghana, who made this known at a media briefing in Accra recently, said while activities in the non-oil sector would be dampened by energy disruptions and high interest rates, increased oil production would keep overall economic growth close to eight per cent.

Continuing, Ms Daseking said a weaker outlook for cocoa and gold exports would leave the current account deficit around 12 per cent of GDP.

She said despite increased foreign direct investment into Ghana, the low external buffers and rising domestic debt ratio could expose the economy to risks such as weaker terms of trade, reduced capital inflows or unanticipated spending needs.

She additionally noted that “energy sector problems could curtail growth while excessive government borrowing is raising the cost of credit to the private sector. Both factors have been identified as key growth constraints in Ghana.”

She said even though IMF supported Government’s transformation agenda, Ghana’s attainment of the development goals would require lower budget deficits to contain external pressures and keep debt sustainable.

In future, successful economic transformation will require a realignment of spending, away from wages and subsidies toward infrastructure investment, she emphasised.

Furthermore, she warned that the swelling wage bill would push Ghana’s debt to levels that could hamper government’s development efforts if not checked.

Government’s deficit target of 6 per cent of GDP by 2015 could push public debt high and buffers low. She therefore suggested an extra fiscal adjustment of three per cent of GDP by 2015.

Government forecast a 9 percent fiscal deficit of GDP this year but its delayed adjustment in utility tariffs could account for the one percent hike by the IMF.