IMF says significant progress in Ghana aid talks

By Kwasi Kpodo ACCRA (Reuters) - The International Monetary Fund (IMF) said on Friday it made significant progress in a third round of talks with Ghana on a financial aid programme aimed at helping the West African country out of a fiscal crisis. Escalating inflation, a currency that has fallen sharply this year and a high budget deficit have severely undermined Ghana's reputation as a star African economy. Ghana grew strongly for years on gold, cocoa and oil exports, but this week's 2015 budget forecasts GDP growth to slow to 3.9 percent from a projected 6.9 percent this year, evidence of the impact of fiscal problems as well as a fall in commodity prices. "The IMF team will continue to support the authorities as they work in the coming weeks ... to take concrete steps in cleaning up the payroll, finalise the remaining details of their medium-term reforms and to seek external financing assurances from bilateral donors," it said in a statement. "Once this work is completed, a financial arrangement to support Ghana's economic program would be agreed," it said. President John Mahama's government is hoping for a three-year deal with balance of payments help of up to $1 billion (0.64 billion pounds). The IMF welcomed Wednesday's budget and said it contained important steps towards increasing revenue, containing the public sector wage bill and cutting subsidies and maintaining public investment above 5 percent of GDP. It also welcomed government measures to consolidate the budget deficit to 3.5 percent of GDP by 2017. The deficit spiralled in 2012 due to an expanding public sector wage bill and since then all three ratings agencies have downgraded the country's sovereign rating. Finance Minister Seth Terkper said the IMF is satisfied with major fiscal reforms the government has put in place and has already outlined proposals for outstanding areas that should enable an assistance deal to be agreed quickly. "We are sustaining the energy we've put in the negotiations and we have already outlined proposals for the remaining details," he told Reuters by telephone. (Writing by Matthew Mpoke Bigg; Editing by Louise Ireland)