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Ghana president says will not extend three-year IMF aid programme

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ACCRA (Reuters) – Ghana will not extend its three-year aid programme with the International Monetary Fund beyond April 2018, President Nana Akufo-Addo said on Tuesday, despite continuing fiscal difficulties.

The president’s announcement is a surprise turnaround after government officials said last month that Ghana was considering a request by the Washington lender to extend the programme to December 2018.

An extension would have reassured markets of the government’s commitment to fiscal discipline, analysts say.

Akufo-Addo said, however, the government was on target with its policy to restore growth and create private sector jobs.

“There is no question about the IMF programme being extended beyond April 2018. We want to complete it and move on,” Akufo-Addo told reporters.

The $918-million agreement was signed in April 2015 to address problems of slow growth and high public debt.

The IMF said in May that an extension was needed after Ghana failed to meet certain deal requirements on schedule.

 

(Reporting by Kwasi Kpodo; Editing by Edward McAllister and Alison Williams)

 

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Corruption in South Africa stunting reforms: IMF

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JOHANNESBURG (Reuters) – Corruption in South Africa is hampering reforms needed to boost economic growth and greater transparency is needed at state-owned companies, a senior International Monetary Fund (IMF) official said on Tuesday.

IMF First Deputy Managing Director David Lipton said that cutting taxes and increasing government spending would not solve the problem of sluggish growth in Africa’s most sophisticated economy.

The IMF recently cut its growth forecast to only 0.1 percent for 2016 versus a previous estimate of 0.6 in May, citing the impact of severe drought and ineffective fiscal policy.

President Jacob Zuma’s unexplained decision to change finance ministers twice in four days in December and a series of political upheavals that followed had also hurt the economy’s prospects, Lipton said.

“The leadership changes at the National Treasury last December and other political developments have had an adverse impact,” he told a public lecture in Johannesburg.

“They have heightened concerns about governance, deepened political uncertainty and shaken investor confidence.”

Lipton also alluded to investors’ lack of faith in the management of South Africa’s 300-odd state-owned enterprises, many of which are over-staffed and under-productive.

A team commissioned by Zuma to review the firms recommended that some should be sold but nothing has happened.

“Support for money-losing companies is a growing drain on government coffers,” Lipton said.

As a solution, he suggested South Africa centralise the formulation of fiscal policy, reduce labour regulation uncertainty and root out public sector corruption.

 

(Reporting by Mfuneko Toyana; Editing by Ed Cropley)

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Angola halves growth forecast, cuts spending as oil price bites

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LUANDA (Reuters) – Angola has halved its 2016 economic growth forecast and slashed government spending as lower oil prices hammer state revenues in Africa’s largest crude exporter, the finance ministry said on Monday.

Sub-Saharan Africa’s third-largest economy will grow 1.3 percent this year, compared with a previous forecast of 3.3 percent, the finance ministry said in a statement.

Government spending will be cut to $24 billion from $30 billion projected in the original 2016 budget as revenues were also slashed to $18 billion from $24.4 billion.

The statement, a rare disclosure by one of Africa’s most secretive states, said Luanda had borrowed $11.46 billion between November 2015 and June 2016, including $5 billion from the China Development Bank and $2 billion from other state-backed Chinese lenders.

Total government debt stood at $47.9 billion, including $25.5 billion in external loans, it added, although this figure does not include debt held by state-owned companies such as domestic oil firm Sonangol.

Cuts to public services have already had a major impact on the former Portuguese colony, with piles of uncollected rubbish lying rotting in the streets of the capital, in the shadow of half-finished concrete office blocks and shopping complexes.

Health experts say the spending reductions are partly to blame for a yellow fever outbreak that started in one of Luanda’s vast slums in December and which has spread throughout the country and as far afield as China.

The finance ministry confirmed it had ended emergency financing talks with the International Monetary Fund (IMF) because it had achieved “great fiscal equilibrium”.

However, it said it was still committed to a structural overhaul of an economy that remains perilously reliant on oil.

The finance ministry has cut its budgetary oil price assumption to $41 a barrel, from $45 previously. Crude oil output remains steady at 1.77 million barrels per day, it said.

 

(Writing by Joe Brock; Editing by Ed Cropley)

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