Business News of 2014-06-01

Gov’t hasn’t ruled out seeking IMF bailout – Terkper

Ghana hasn’t excluded the option of seeking a bailout from the International Monetary Fund to help finance its budget and current-account deficits, Finance Minister Seth Terkper said.

“We haven’t ruled it out,” Terkper said in an interview in Mozambique’s capital, Maputo, where he is attending an IMF conference. The government is still assessing whether measures put in place to help narrow the fiscal shortfall have been effective, he said.

First-quarter figures published today suggested that the efforts are bearing fruit, with the deficit reported at 2.1 percent of gross domestic product in the period, below the 2.3 percent target.

The IMF has not received any request for assistance from Ghana, Christine Lagarde, the Washington-based lender’s Managing Director, said.

“Ghana is a member of the IMF and we always entertain requests by any country,” Lagarde said in an interview in today in Maputo with Bloomberg TV Africa’s Eleni Giokos.

Ghana, West Africa’s second-biggest economy after Nigeria, is struggling to curb a budget gap that Moody’s Investors Service forecast will exceed 10 percent of gross domestic product for a third consecutive year.

Cedi Slump

Investor concern that the government will fail to rein in spending has fueled a 21 percent slump in the cedi against the dollar this year, the worst performance of more than 30 African currencies tracked by Bloomberg.

Terkper said it’s “achievable” to reduce the shortfall to 5 percent to 6 percent of GDP within four years.

The minister’s comments indicate “that one has to prepare for an IMF deal at some point, maybe not immediately,” Samir Gadio, London-based emerging markets strategist at Standard Bank Plc, said in response to e-mailed questions. “That’s the turning point everyone is looking for.”

Ghana is also seeking to tap foreign investors with a third Eurobond sale to help fund its spending plans. The government is close to selecting advisers for the bond, Terkper said.

“For those who are close to Ghana and who are looking at the data in terms of investment opportunities and the rest, they know that the medium-term story is good and we are doing our best to correct the short term,” he said.

The cedi fell for a fourth day, weakening 1.8 percent against the dollar to 3.06 as of 12:36 p.m. in Accra.

Source: Bloomberg
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