Just over two years ago, it was President Obama’s model African nation. Now Ghana is looking for a bailout.<\/p>\n
The small West African nation won many admirers for growing rapidly and reducing poverty.<\/p>\n
But the poster child for progress in Africa, hailed by Obama in March 2012 as a “wonderful success story,” is now struggling.<\/p>\n
Growth is slowing, despite rising oil output. Government borrowing and inflation are rising, and the currency — the cedi — has lost about 40% of its value this year.<\/p>\n
President John Mahama said Ghana would be seeking the support of the International Monetary Fund as it tries to stabilize the currency and economy.<\/p>\n
The IMF has not received a formal request from Ghana for assistance, but said it is ready to work with the government on a support program.<\/p>\n
So why the dramatic reversal?<\/strong><\/p>\n Shilan Shah, African economist at Capital Economics, said Ghana has been spending too freely on public sector wages and subsidies, leading to a widening budget deficit.<\/p>\n “Compounding the problems are recent allegations that the Bank of Ghana is attempting to finance the deficit by printing money, which has pushed up inflation to over 15% year-on-year,” Shah wrote in a research note.<\/p>\n Ghana’s imports are also racing ahead of exports, draining the country’s foreign currency reserves and piling pressure on the cedi.<\/p>\n An IMF bailout would provide backstop funding while the government takes steps to get a better balance between spending and revenue, and in foreign trade.<\/p>\n That’s almost certain to mean tough austerity measures for a country where annual GDP per capita is still only $1,850. The IMF may also insist that interest rates — already at 19% — rise further to persuade people to spend less and contain inflation.<\/p>\n Growth could slow to about 4% this year and next, down from 7% in 2013, as a consequence, said Capital Economics’ Shah.<\/p>\n Talk of a bailout comes less than a decade after $3 billion in debt was wiped off Ghana’s books as part of an international relief initiative.<\/p>\n –<\/p>\n Source: CNN<\/p>\n","protected":false},"excerpt":{"rendered":" Just over two years ago, it was President Obama’s model African nation. Now Ghana is looking for a bailout. The small West African nation won many admirers for growing rapidly and reducing poverty. But the poster child for progress in Africa, hailed by Obama in March 2012 as a “wonderful success story,” is now struggling. […]<\/p>\n","protected":false},"author":14,"featured_media":37012,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jnews-multi-image_gallery":[],"jnews_single_post":[],"jnews_primary_category":[],"jnews_social_meta":[],"jnews_override_counter":[],"footnotes":""},"categories":[],"tags":[38,21,4],"class_list":["post-37010","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","tag-palaver-newspaper","tag-psychiatric","tag-st-augustines-college"],"_links":{"self":[{"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/posts\/37010","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/users\/14"}],"replies":[{"embeddable":true,"href":"https:\/\/citifmonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=37010"}],"version-history":[{"count":0,"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/posts\/37010\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/media\/37012"}],"wp:attachment":[{"href":"https:\/\/citifmonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=37010"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/citifmonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=37010"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/citifmonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=37010"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}