The Bank of Ghana said it financed the government’s entire budget deficit in the first quarter, measures that Fitch Ratings warned will fuel inflation and weaken Africa’s worst-performing currency.
Ghana’s central bank is printing money to help finance the government’s budget deficit, threatening to fuel inflation and weaken a currency that’s already the worst performer in Africa this year.
Zambia’s kwacha weakened in the world’s worst decline against the dollar today as a shortage of foreign exchange pushed the currency of Africa’s second-biggest copper producer to a record low.
South Africa may miss its economic growth target this year, curbing tax revenue and leading to bigger-than-planned budget deficits, according to Standard & Poor’s and Fitch Ratings.
Zambia’s credit rating was cut by Fitch Ratings after Africa’s largest copper producer said that spending on wages and subsidies will widen the budget deficit more than forecast.
Ghana’s failure to narrow its budget deficit more quickly may add to debt, threatening a credit downgrade, Fitch Ratings said.
Fitch Ratings said South Africa’s economic growth trend is still consistent with its stable outlook on the nation’s credit rating.
Fitch Ratings cut Ghana’s credit rating by one level as the government said it won’t be able to meet its target to narrow the budget gap.
South African Finance Minister Pravin Gordhan is spurning the International Monetary Fund’s advice on debt and risking sovereign downgrades by boosting borrowing faster than projected to counter falling tax revenue.
"Printing money to finance the deficit will aggravate already high inflation and contribute to further cedi weakness."
- Carmen Altenkirch on Jun 09, 2014