Ghana raised on November 13 its GDP outlook for 2015 and confirmed it is on track to meet its budget deficit target of 7.3% of GDP this year and trim it further to 5.3% next year, in line with its efforts to win back investor confidence after low commodity prices and inadequate power supply hurt growth and led to fiscal slippage, sharp currency depreciation and surging inflation.

In his Budget Statement and Economic Policy presentation to parliament Finance Minister Seth Terkper, said that the government’s fiscal consolidation efforts, supported by the International Monetary Fund’s $918mn 3-year economic programme, are yielding positive results, making the economy more efficient. The 2015 GDP growth forecast was revised up to 4.1% from 3.5% projected in July. Growth is anticipated to strengthen further to 5.4% next year and to average at least 8.2% during 2016-2018.

The main growth driver this year is set to be industry with a projected 9.1% expansion this year, up from a tiny 0.8% rise last year. On the other hand, growth in agriculture and services is set to slow to 0.04% from 4.6% and to 4.7% from 5.6%, respectively. Last year, Ghana’s economy expanded by 4.0%.

Terkper predicted a foreign trade deficit of $3.54bn for 2015, equal to 9.8% of GDP, and a current account deficit of $2.93bn, equal to 8.1% of GDP. He also projected the country’s gross foreign assets to increase to $6.47bn, sufficient to cover 4.0 months of import of goods and services, at end-2015 from $4.52bn, equal to 2.8 months of imports at end-September.

Next year, Ghana will aim to maintain gross international reserves at no less than 3 months of import cover, Terkper said. He set also an end-year inflation target of 10.1% for 2016, aiming to lower it to below 5% by 2019.

For the first nine months of 2015, Ghana recorded total revenue and grants of GHS22.69bn, equivalent to 16.9% of GDP, against a target of 16.3% of GDP. Total expenditure, including payments for the clearance of arrears and outstanding commitments, amounted to GHS29.44bn (22% of GDP), largely in line with target. The overall budget balance on cash basis registered a deficit of GHS6.74bn, or 5.1% of GDP, below a target of 5.7%.

For 2016, Terkper set a deficit target of GHS8.4bn (5.3% of GDP) on the back of total revenue and grants of GHS38bn (24% of GDP) and total expenditure and arrear clearance of GHS46.4bn (29.3% of GDP). This compares with the 2015 targets of a deficit of 7.3% of GDP, revenue of 24.1% of GDP and expenditure of 31.5% of GDP. Some 40% of the 2016 fiscal deficit is set to be financed by foreign funding and the rest should come from domestic sources.