Ghana’s authorities bowed to the inevitable earlier this month by formally requesting assistance from the IMF in dealing with the country’s enormous twin budget and current account deficits. This follows hot on the heels of Zambia which, faced with similar vulnerabilities, turned to the Fund in June. The most likely form of agreement for both countries would appear to be a Stand-By Arrangement, which would include conditions to substantially tighten fiscal policy over the coming years. With a period of austerity now looming for both Ghana and Zambia, economic growth is likely to slow sharply. We are forecasting average growth of around 4.0% in Ghana and 4.5% in Zambia in 2014-15, significantly slower than rates of 7% that had become the norm over the past decade.
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