(Ecofin Agency) - This year, the budget gap in Ghana is expected to reach 10%, local media reported quoting the Finance Minister Ken Ofori-Atta (pictured). “We had expected 6.8% GDP growth and now we realize there is going to be a steep drop. The deficit, which we had jealously guarded and kept under 5%, is now expected to widen north of 10%,” the official said.
This could make the country miss one of the convergence criteria of the ECO, the proposed single currency of the Economic Community of West African States (ECOWAS). Indeed, as part of the ECO project, ECOWAS countries have agreed to keep their budget deficit under 4%. Ghana will find it difficult to halt the deterioration of this convergence criterion on inflation. The criterion requires that the inflation rate in the countries participating in the creation of the ECO should not enter the double-digit case. Ghana is currently at 11.3%.
It should be recalled that Ghana and especially Nigeria are the most critical of the WAEMU's decision to start using the single currency, in line with the decision taken in June 2019 and the agreement with France in December of the same year. Despite the pandemic, inflation within the WAEMU was only 1.5% at the end of April 2020 and the public deficit is also expected to stay under control.