Ghana almost halved its forecast for growth this year amid a sluggish economy, global headwinds and the impact of fiscal belt-tightening under an agreement with the International Monetary Fund.

The west African nation now expects real gross domestic product growth of 1.5% this year, down from 2.8%, Minister of Finance Ken Ofori-Atta told lawmakers in a mid-term budget review on Monday.

“The downward revision in projected growth for 2023 is an indication of a broad slowdown in the three sectors of the economy as a result of factors such as the fiscal consolidation plan and difficult global conditions,” he said. “Overall GDP growth is, however, projected to rebound to 2.8%, 4.7%, and 4.9% in 2024, 2025 and 2026, respectively.”

The finance minister said that the target for the country’s 2023 primary budget – which excludes interest payments from expenditures – was cut to a deficit of 0.5% of GDP compared with a previously projected surplus of 0.7%. That’s measured on a commitment basis, as opposed to a cash basis, which recognizes income when it’s received and expenses when they are paid.

The country’s eurobond maturing in March 2061 jumped 2.8 cents to 43.7 cents on the dollar in London afternoon trade.

Ghana is restructuring most of its debts under a $3 billion bailout agreed with the IMF in May. The fund requires it to reach timely agreements with investors while also urging the central bank to continue to curb inflation.

The Bank of Ghana last week unexpectedly raised interest rates by 50 basis points to 30% because it said that price pressures were not easing fast enough.

“The 2023 revised fiscal framework is now fully aligned with the IMF programme fiscal objectives,” Ofori-Atta said.

The IMF program was conditional on Ghana committing to reining in spending and collecting more revenue. The world’s second-largest grower of cocoa beans plans to reduce debt to 55% of GDP by 2028 from 71.3% of GDP at the end of 2022.

Ghana is expected to improve its primary balance under the IMF-supported program to reach a surplus of 1.5% of GDP in 2025 through 2028. Given Ghana’s low tax-to-GDP ratio compared to its potential, the authorities’ objective is to raise the government revenue-to-GDP ratio to more than 18.5% by the end of the three-year program from 15.7% in 2022.

--With assistance from Moses Mozart Dzawu.