Two separate new assessments by the International Monetary Fund (IMF) and the Bank of Ghana (BoG) have served early warning that government may not meet two of its key macro-economic targets for 2014 - those for its fiscal deficit and for inflation respectively.

An IMF assessment, resulting from the findings of a mission to Ghana in February, has concluded that: "The weakening growth momentum and inflationary pressures are expected to continue into 2014, calling for urgent measures to address macroeconomic imbalances.

In the absence of further measures, the mission sees the fiscal deficit target of 8.5 per cent of GDP at risk. This combined with a weak outlook for gold prices, would also keep the current account deficit at high levels".

It is instructive that an IMF team led by the same head of mission, Christina Daseking, last year repeatedly warned that the 2013 fiscal deficit target would not be met, forecasting a deficit of over 10% of Gross Domestic Product (GDP) rather than 9% government had aimed for.

The new dire forecast for 2014 by the IMF mission has been accompanied by a similarly pessimistic assessment of Ghana’s economic performance in 2013.

Daseking says “Ghana’s economy slowed down on the back of sizable external and fiscal imbalances and energy disruptions in the first half of the year. Based on data for the first three quarters of 2013, the mission estimates growth of 5.5 per cent—well below the levels of recent years.

“On the fiscal side, revenue shortfalls, overruns in the wage bill, and rising interest costs pushed the 2013 deficit to 10.9 percent of GDP, versus a target of 9 percent. The overrun would have been higher in the ab-sence of significant revenue measures, the elimination of fuel subsidies, large increases in utility prices, and compression of other expenditure.

“The large fiscal deficit combined with a weaker external environment, led to a widening of the current account deficit to 13 percent of GDP and to further pressure on international reserves. The consequent weakening of the cedi together with large administered price increases contributed to inflation rising above the end-year target range to 13.5 percent.”

Now, in its own forecast, Ghana’s own central bank, in its latest Inflation Outlook, has predicted that the inflation target for 2014 will not be met either.

According to the BoG, inflation is likely to remain above the target band of between 9.5% and 11.5% by the end of 2014 but is expected to return to the target band next year, barring any risks within the period.

According to the report: “The main underlying assumptions of these forecasts are the likely pass through effects of the faster pace of the depreciation of the cedi, the slower than anticipated fiscal consolidation, continued utility and petroleum price adjustments and the associated increases in transport fares”

It further warned that if the cedi depreciates any further, inflation would rise above the new forecasts.

The BoG’s new forecast replaces that of the central bank’s governor, Dr Kofi Wampah, who had maintained until the turn of the year that inflation would fall back into the target band before the end of 2014.

The change in the forecast is mainly the result of the pass along effects, of the cedi’s sharp depreciation at the beginning of the year.

It fell by 7.4% during the first six weeks of 2014 alone before some desperate measures implemented by the BoG helped to stem its haemorrhage.

However the other major reason advanced for the new forecast - the slow pace  of fiscal consolidation - is the major concern addressed by the IMF assessment.

Daseking says “The success of the government’s ambitious transformation agenda is contingent on restoring macroeconomic stability.”