Government has not ruled out a bail-out by the International Monetary Fund (IMF) to help restore economic stability, Finance Minister Seth Terkper has said.

"We are a member of the IMF, and an IMF member that finds itself in difficult times can fall on the resources of the fund. The IMF still remains a lender of last resort", he told BFT in reaction to a statement by former Deputy Governor of the Bank of Ghana, Dr Mahamudu Bawumia, that an IMF bailout may become necessary by year end if the economic situation does not improve.

"I don't see it as a warning", said Mr. Terkper of Dr Bawumia's statement.

"We've never ruled it out. If it becomes necessary, we'll fall on the fund.”

IMF programmes, which involve critical financial assistance to a government to tackle mostly external economic pressures in exchange for a commitment to strict economic discipline, are hardly popular in any nation — and the fact that it is seen as an option underlines both the dire economic situation and government's strong will to tackle short-term volatilities.

Of particular worry are the large fiscal and current account deficits and the damaging rate of depreciation of the cedi, which the Bank of Ghana is not able to keep a very firm grip on given its low net foreign reserves.

According to ratings agency Fitch, the net reserves stood at a modest $2.7 billion in December, worth 1.3 months of current external payments.

The Bank of Ghana (BoG) has not published official data on the net reserves .recently, but an official told the B&FT the net position is close to the threshold where the central bank is more careful, about deploying the volumes needed to defend the cedi against depreciation.

The central bank has tried other tools to stem the slide, combining a big interest-rate hike and regulations to minimise the demand for foreign exchange for domestic payments or hoarding.

While the measures have moderated the currency's pace of decline, the cedi is still undesirably weak and has slipped by 10 percent against the dollar since the BoG's interventions oil February 4 and 6?

Its 17 percent loss in the first quarter of 2014 exceeds a depreciation rate of 14 percent for the whole of 2013.

Mr. Terkper said the reserves are low because of the fall in commodity prices in 2013, with an estimated $1.3 billion lost to weak cocoa and gold prices.

“For me, the relevant issue is: how do we manage volatilities as an economy?” he said.

 IMF bail-outs come with significant strings attacheded, and sometimes put the Fund in a situation where it micro-manages a country's economy.

The IMF would probably demand a quicker pace of fiscal-tightening, for instance, if Ghana were to sign on to a programme with the Washington-based lender.