Ghana cuts GDP Forecast

Ghana has cut its 2016 economic growth forecast sharply to 4.1 percent from 5.4 percent due to lower export prices and irregular oil production, Finance Minister Seth Terkper told Reuters on Monday.

 

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," Terkper said.

 

GDP growth should pick up between July and September as a 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 percent in 2015 from 14.4 percent in 2011, a year after it began producing oil. Non-oil GDP was expected to grow by 4.6 percent, he said.

 

The government has agreed with local lenders to extend repayment of a 2.2 billion cedi ($560 million) debt owed by state power company Volta River Authority (VRA) for up to five years, Terkper said.

 

"VRA's credit lines will be open 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.

 

On Monday, the central bank held its benchmark policy rate at 26.0 percent saying the risks to growth and the prospect of inflation were in balance. (Reuters, Reporting by Kwasi Kpodo; Editing by Matthew Mpoke Bigg and Catherine Evans)