Economic growth in Ghana is expected to slip further to 4.8 percent at the end of 2014, the International Monetary Fund (IMF)'s Country Director Samir Jahja said here on Thursday.
In 2014, non-oil Gross Domestic Product (GDP) will slip further to record 4.4 percent, he added.
The IMF put economic growth in 2013 for the West African cocoa, gold and oil producer at 5.5 percent, based on figures from the first three quarters of last year.
At a media briefing to explain the findings of the 2014 Article four-country review mission, Jahjah explained that although no actual data existed as the year was still young, the projection was based on information received from the mining firms and oil sector.
He further explained that high levels of interest rates would have impact on consumers and the resultant inflation from that would erode their purchasing power.
"The prospects for economic growth in Ghana are still extremely good, and the medium term projections would be good, but if the wage imbalance is not checked and it keeps fiscal deficit high with the debt servicing also attracting high interest rates, that also affects the interest rates in the market, and would affect growth," the country director pointed out.
He urged the government to work hard to address the macroeconomic challenges in the economy to restore confidence.
According to him, the debt burden on government was growing and debt servicing was coming at a high cost, urging the government to take steps to deal with those challenges.
In his intervention, Minister for Finance Seth Terkper explained that most of the challenges facing the economy were temporary and had happened before, so the economy would bounce back stronger than before.
He cited 2009 when GDP growth dropped to above 4.0 percent, but later started inching up till oil production boosted economic growth to 15 percent in 2011.
According to him, the reforms being implemented by the government were in the recognition of the challenges.
"One of the causes of the challenges is that the IMF and all Development Partners (DPs) did not have a program for countries transiting into Middle Income Country (MIC) status," Terkper stated.
He said the DPs had withheld a total of 700 million dollars in concessional financing of the budget in 2012 and 2013, which contributed greatly to the budget deficits the country suffered in those two years.
The attitude of the DPs was borne out of the assumption that Ghana was no more implementing reforms in its economy after exiting the IMF program in 2010, he said.
"However, after we demonstrated to them what the government was doing, they have realized that we are implementing more reforms and more stringent ones than we were carrying out under the IMF compact," Terkper said.
The finance minister was optimistic that the new realization among the DPs could trigger their release of development assistance to the country.
The IMF issued a press statement on Wednesday to put Ghana's provisional economic growth in 2013 at 5.5 percent against the Ghana Statistical Service projection of 7.4 percent./.
Justice Lee Adoboe
English.news.cn