Ghana expects economic growth to slow and the budget deficit to rise next year as oil production drops off sharply, the finance minister said on Wednesday.

The West African country has enjoyed some economic stability since the conclusion of a three-year lending programme with the International Monetary Fund in March and oil revenues have boosted growth to one of the highest in the region.

President Nana Akufo-Addo is standing for re-election in 2020 against his predecessor John Mahama in a race likely to turn in large part on the incumbent’s stewardship of the economy, which depends on oil, gold and cocoa production.

A decline in crude production from existing fields is expected to dampen growth in coming years, Finance Minister Ken Ofori-Atta said while presenting the 2020 budget to parliament.

He projected growth would fall from 7.0% this year to 6.8% next year and average 5.7% from 2020-23. However, he said oil output was expected to recover strongly in 2023 thanks to production from Aker ASA’s Pecan field.

The budget proposal calls for a spending rise in 2020 of 21% to 85.9 billion cedis ($15.67 billion), which would increase the budget deficit to 4.7% of GDP from 4.5% in 2019.

Ofori-Atta said the proposal would put Ghana on the path toward reducing its fiscal deficit to sustainable levels but warned “the risk of external debt distress and overall public debt distress remains high over both the medium and long term”.

Ghanaian governments have a history of hiking spending in election years. Akufo-Addo campaigned in 2016 on promises to cut deficits following spending by Mahama’s government that blew a $1.6 billion hole in the budget.

The November 2020 election will be the third consecutive poll in which Akufo-Addo and Mahama face off.

“President Akufo-Addo and his Government will ensure that the perennial excessive spending during such periods will not happen in 2020,” Ofori-Atta said.

He said the government planned to raise up to $3 billion on international markets through bonds and syndicated loans to support spending in 2020 and manage debts.

GDP growth for the first half of 2019 stood at 6.2%, up from 5.4% for the same period the previous year, Ofori-Atta said.

Credit: Reuters

(Reporting by Christian Akorlie; Writing by Juliette Jabkhiro; Editing by Aaron Ross and Andrew Cawthorne)