By Kwasi Kpodo

ACCRA (Reuters) – Ghana’s new government plans to review its $918 million programme with the International Monetary Fund because it may need more money for its spending plans, a minister-designate said on Friday.

The three-year programme, signed by the previous government in April 2015, imposes strict targets for revenue collection and spending. It aims to reduce inflation, the public debt and the budget deficit and restore rapid growth to Ghana’s economy.

President Nana Akufo-Addo won December’s election in part by promising voters he would give the equivalent of $1 million to each constituency per year for development, build a dam in every village and a factory in every district while cutting taxes.

“It (the IMF programme) must be reviewed. It will certainly be reviewed,” Yaw Osafo-Maafo told a parliamentary committee vetting him as senior minister. The programme “squeezes the fiscal space” and would be reviewed with the IMF, he said.

Economists say the Fund cannot change its overall programme objectives but interim targets can be modified in the light of performance between each IMF review. As a result, the new government could negotiate less onerous conditions if it finds that targets set for the end of 2016 were not met.

In an indication that this may happen, the new government says the budget deficit stood at around 8 percent at the end of 2016, higher than the 5.3 percent targeted under the programme.

The Bank of Ghana will likely cut benchmark interest rates by 50 basis points to 25 percent on Monday because of the fiscal deficit overshoot and recent pressure on the cedi currency, said a research note by Standard Chartered.

The government will also restore central bank financing of the deficit, Osafo-Maafo said. Under the IMF programme, Ghana was supposed to present a bill for zero deficit financing from 2015 but parliament instead passed a law allowing 5 percent financing.

“It (the law) was unnecessary and it will be reviewed,” Osafo-Maafo, a former finance minister said.

He said the government will continue to borrow “in a better way” to refinance debt, which stands at 71.8 percent of gross domestic product.

The government says it will maintain fiscal discipline and give Ghana double-digit growth for each of the four years of its term in office. Ghana’s main exports are cocoa, gold and oil.

“The economy is not in the best of shape but it (the growth target) is doable,” Osafo-Maafo said.

(Editing by Matthew Mpoke Bigg/Mark Heinrich)

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NAIROBI (Reuters) – Privately-owned Nakumatt, Kenya’s biggest supermarket chain by sales, has agreed to sell a 25 percent stake to a foreign fund for $75 million, part of an effort to bolster its balance sheet and pay off debts, its managing director said on Wednesday.

Nakumatt, which started with a single store in Nairobi in 1992, operates 68 outlets in Kenya and neighbouring states Rwanda, Uganda and Tanzania.

The growing economies of East Africa have drawn in foreign retailers including Bostwana’s Choppies, South Africa’s Game Stores and French retailer Carrefour, through its Dubai-based franchisee Majid al-Futtaim.

“We are already at final stages with the investor. We are just waiting for the money to come,” Atul Shah told Reuters, without naming the fund involved.

The deal is part of the chain’s plan to overhaul its balance sheet and restructure a $75 million debt tranche owed to four local banks, Shah said. Expansion and other investments have pushed its debt up overall to $150 million.

“Nakumatt is going through some financial stress. We are out looking for funds and we are restructuring,” Shah said, adding the cash was expected before the end of February and would help the firm extend the tenor of its debts to more than five years.

“It stabilises our cash flow and it also gives a little room for the expansion plan that we have in place,” he said.

Nakumatt is being guided by a Dubai-based transaction adviser that Shah did not name. The equity deal with the foreign fund values the business at $300 million.

“It is a fair valuation,” Shah said, noting the business had expanded from a single small store to a regional network in 24 years.

(Reporting by Duncan Miriri; Editing by Edmund Blair and Mark Potter)

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By Paul Carsten, Ulf Laessing and Sujata Rao

ABUJA/DAVOS, Switzerland (Reuters) – Nigeria’s efforts to secure funds from international lenders to help haul it out of recession have stalled because it has not submitted the required economic reform plans, according to one of the banks and sources close to the matter.

The government has been in loan talks with the World Bank for a year. It had told the lender it would present its proposed reforms to make the economy more resilient and attractive to investment by the end of December, according to Western diplomats and a Nigerian official who declined to be named as they are not authorised to speak publicly.

But this has not happened and as a result of the delay, which the government has not explained, the Washington-based bank has not been able to consider a loan yet, the sources said.

Nigerian Finance Minister Kemi Adeosun declined to comment.

The African Development Bank (AfDB), meanwhile, is holding back the second tranche of a $1 billion loan for Nigeria, AfDB president Akinwumi Adesina told Reuters on the sidelines of the World Economic Forum in Davos, Switzerland.

“We are waiting for the economic policy recovery programme and the policy framework for that,” said Adesina, without specifying when the AfDB had expected to receive the reform plans.

The World Bank told Reuters in an email that Nigeria was currently preparing its plan “on the basis of which the World Bank will determine with the government the most appropriate lending instrument to support the implementation of the reform plan”.

Nigeria has said it is seeking to borrow $4 billion in total from the World Bank and other foreign institutions and $1 billion through Eurobonds to plug a yawning budget deficit and fund badly needed infrastructure projects.

The country, which relies on oil revenue for most of its income, has been hit hard by the sharp fall in crude prices since 2014 and is struggling to drag itself out of its first recession in 25 years.

It is unclear why the government has not submitted reform plans to the international lenders. The funding deadlock could throw into doubt badly needed infrastructure projects planned for this year, including new roads and improvements to power infrastructure.

The failure to secure the funds, and to present a reform programme, could also deter some investors from Nigeria’s planned $1 billion Eurobonds sale in March.

A Nigerian financial source said the government was working with a consultancy on putting together a package of proposed reforms. The source, who declined to be named as the matter is confidential, did not elaborate.

RECORD BUDGET

Nigeria needs money to help plug a budget deficit of 2.2 trillion naira ($7 billion) for 2016 and to help fund a record budget of 7.3 trillion naira for 2017 which is aimed at stimulating the economy.

It has been holding talks with various institutions and China over the last year to borrow funds but apart from a $1 billion loan from the African Development Bank, at a rate of 1.2 percent, nothing has been made public.

The Abidjan-based AfDB has paid out an initial $600 million in November but is awaiting the economic reform proposals before it disburses the rest of the money.

It is unclear how much money Nigeria is seeking from the World Bank, or whether the lender was pushing for any specific economic reforms from the government.

The diplomatic sources, however, said the bank wanted to see how Nigeria planned to lower its dependence on oil revenues and boost investment, which has been hit by a high official exchange rate for the naira currency.

Nigeria’s central bank, backed by President Muhammadu Buhari, has kept the naira rate to the dollar at 40 percent above the unofficial – or parallel – market rate, which has dried up dollar supplies on official channels.

The policy has also made investors reluctant to commit new projects as they expect the central bank will have to devalue the naira eventually as oil production has been hit by an insurgency in the Niger Delta oil hub.

The central bank has also imposed hard currency curbs making impossible the import of almost 700 goods, which has forced dozens of plants to close running out of spare parts.

Adesina told Reuters on Tuesday that the currency rate problem needed to be addressed by the government in its reform programme, which he said the AfDB was coordinating with the World Bank.

“We are being clear that the quantitative restriction in terms of access to FX is what’s creating huge gap between parallel market rates and official rates,” he added.

($1 = 314.5000 naira)

(Reporting by Paul Carsten and Ulf Laessing in Abuja and Sujata Rao in Davos, Switzerland; Additonal reporting by Chijioke Ohuocha in Lagos; Editing by Pravin Char)

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