By Kwasi Kpodo
ACCRA, June 16 (Reuters) - The Ghanaian economy has been picking up since the year began, with its exchange rate and inflation gradually stabilising, Finance Minister Kwabena Duffuor said on Tuesday.
He said Ghana's current account deficit stood at $429.5 million in the first quarter of 2009, much smaller than $801.1 million a year earlier, and that the improving outlook had paved the way for "positive" negotiations with development partners.
Ghana has said it is in talks with the International Monetary Fund to secure at least $1 billion in support to prop up its foreign-exchange reserves.
"The first five months of 2009 have witnessed a positive primary fiscal balance, gradual stabilisation of the cedi exchange rate, a sound, well-capitalised and fairly liquid financial sector ... a decline in the rate of inflation and improvement in the trade balance," Duffuor said.
The West African country, the world's second-biggest cocoa grower, has been grappling with a swelling budget deficit and trade imbalances after the cost of food and fuel imports surged to record highs last year.
Its woes have unsettled some investors holding its debut Eurobond <374422AA1=RRPS>.
Inflation dropped to 20.06 percent in May from 20.56 percent in April, the first fall in nine months, but still above the 2008 peak of 18.4 percent. [ID:nLC815603]
Its budget deficit stands at a provisional 14.9 percent of gross domestic product in 2008, a gap the new government of President John Atta Mills plans to narrow to 9.4 percent of GDP by the end of 2009.
"Recent negotiations with the multilateral institutions will hopefully see an inflow of $1.2 billion budgetary and project support from the World Bank and possibly $1 billion from the IMF for balance of payments support," Duffuor said.
Speaking at a meeting of industrialists and businessmen in Accra, he said cocoa industry regulator Cocobod was aiming to syndicate $1.2 billion on the international capital markets to buy next season's cocoa production.
Cocoa purchases are made in cedi, meaning the syndicated funds would be available to the central bank to improve the country's foreign reserve position, Duffuor said.
He said the cedi had fallen a further 15 percent against the dollar since January, although it was gradually stabilising.
"During the first five months of this year, the larger- than-expected twin deficits (fiscal and current account) of 2008, depletion of foreign reserves at the central bank, and uncertainties in the domestic and global financial markets continued to weigh heavily on the cedi," he said.
(For full Reuters Africa coverage and to have your say on the top issues, visit: http://af.reuters.com/ ) (Editing by Nick Tattersall and Jan Paschal)