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Accra - Yields on Ghana’s bonds surged the most in six weeks after Finance Minister Seth Terkper said the West Africa nation will increase spending even as a budget deficit is seen widening to lower revenues from oil.
Yields on Ghana’s $1bn of Eurobonds due August 2023 rose 30 basis points to 10.01% at 11:58 in the capital, Accra, the most on a closing basis since June 14.
The country’s revenue from oil in 2016 will drop to 1.4bn cedis ($352m) from a previous estimate of 2bn cedis, while Ghana will increase spending by 1.9bn cedis of previous a previous forecast, Terkper told lawmakers on Monday.
"Since the budget deficit was higher than projected, it may paint a picture that we’re not doing as well as we should," Nana Kofi Agyeman Gyamfi, a senior analyst at Bora Capital Advisors in Accra, said by phone on Tuesday. "It creates jitters among investors."
Ghana’s budget shortfall for the first five months was seen at 2.5% of gross domestic product, compared to a target of 2.2%, Terkper said.
The government of President John Dramani Mahama is battling to meet growth forecasts as lower prices for oil exports and regular power cuts weigh on the economy ahead of elections scheduled for December.
It turned to the International Monetary Fund in April last year for a loan of almost $1bn to help rein in the deficit and arrest declines in the currency.
