Ghana has revised its GDP and inflation outlook for 2015 to account for worse-than-expected developments during the first five months of the year, caused mainly by a sharp depreciation of the cedi, which pushed up prices and hurt growth, Finance Minister Seth Terkper said on July 21 in his Mid-Year Review of the Budget Statement and Economic Policy presentation to Parliament.

“While the situation has started to improve, the recent exchange rate depreciation due to high outflows of foreign exchange, and the rising inflation posed downside risks to the achievement of the growth target for the year,” Terkper said.

Overall real GDP growth is now projected at 3.5% for 2015, down from the previous estimate of 3.9% and down from last year’s 4.0%. The non-oil real GDP projection was lowered to 2.3% from 2.7%.

The end-year inflation target was lifted to 13.7% from 11.5%, which still looks optimistic, given the fact that annual consumer price inflation accelerated for the fifth month in a row in June, rising to a nearly 6-year high of 17.1% from 16.9% in May.

Gross international reserves are projected to remain at not less than three months of import cover of goods and services.

Ghana’s 2015 budget deficit is now estimated to reach 7.3% of GDP, an improvement from last year’s 10.2%, but above the initial target of 6.5%. However, Terkper warned already in March that the fiscal gap would be higher as the sharp drop in oil prices would cut revenues. Then, he saw the shortfall at 7.5% of GDP.

The budget deficit is planned to be financed through GHS4.97bn from domestic sources and a $1.5bn Eurobond to be issued by the end of the year.

Ghana, which has been plagued by electricity shortages and weak commodities prices, recently started an IMF-backed $918mn 3-year loan programme that should help restore macroeconomic stability and win back investor confidence, thus boosting economic growth. In May, Terkper predicted that economic growth would more than double to 9.2% by 2017, inflation would brake to 8.2%, and fiscal and current account deficits would shrink to 3.7% and 4.9% of GDP, respectively.