(Adds details from conference call)
By Lesley Wroughton
WASHINGTON, July 16 (Reuters) - Ghana will receive around $1.1 billion in resources from the International Monetary Fund, as the country tries to reduce its widening budget deficit, a senior IMF official said on Thursday.
The IMF resources include a $600 million loan over three years approved on Wednesday and another $452 million in IMF special drawing rights, IMF mission chief to Ghana, Peter Allum, told reporters on a conference call.
The SDR contribution comes from an agreement reached in April among Group of 20 member nations to boost global liquidity through a $250 billion allocation of SDRs to the IMF’s 186 member countries, possibly this year.
SDRs are the IMF’s internal unit of account, which is a currency basket composed of the dollar, euro, yen and pound.
Allum said Ghana’s economy was generally holding up well in the wake of the global financial crisis, buoyed by prices for cocoa and gold products.
The country’s budget woes began in 2007 as the government dealt with a record rise in global food and fuel prices, followed by a domestic power crisis and election-related spending.
He said the IMF’s $600 million loan program, under the Poverty Reduction and Growth Facility for low-income countries, was designed with fiscal, inflation and international reserve goals.
It includes a government target to reduce the fiscal gap to 9.4 percent of GDP this year, from a current 14-15 percent. A fiscal target of 6 percent of GDP in 2010 will be discussed with the authorities in talks in September, Allum added.
To reduce the deficit, he said adjustments will be needed in the large public sector payroll and possibly large increases in domestic electricity tariffs for residential and business users.
Meanwhile, Allum said gross domestic product growth in Ghana was expected to reach 4.5 percent this year, then rise to 5 percent next year. Growth would likely soar to around 24 percent in 2011 when oil flows start, of which 6.2 percent would come from the non-oil sector and the rest from oil production.
Ghana is set to become Africa’s newest oil producer and its offshore oil finds have fueled hopes for faster growth in one of Africa’s most promising economies, which is already the world’s biggest cocoa grower and Africa’s second-largest gold miner.
Allum said the economy was expected to get a major boost from oil production in the first 5 to 6 years starting in 2011 with revenues expected to increase between 6 to 7 percent of GDP in the first few years.
He said the IMF had calculated that oil income to the budget will be worth about $40 per person in Ghana in 2011, which is less than $1 a week.
“That will make some differences to living standards in Ghana but not of a magnitude that you can afford to use it imprudently, and you need very strong budget mechanisms to make sure that money ends up in programs where the money is needed,” he added.
Allum said how to manage Ghana’s petrodollars and control the budget will be part of discussions with the authorities over the next couple years. (Reporting by Lesley Wroughton; Editing by Andrea Ricci)