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Ghanaian President John Atta Mills (2nd R) turns the valve to flag off first oil production at FPSO Kwame Nkrumah oil rig at the Jubilee field in Takoradi on Dec.15, 2010.

Pius Utomi Ekpei/AFP/Getty Images/Pius Utomi Ekpei/AFP/Getty Images

Ghana's fiscal performance is strongly improved on last year and the country's full-year fiscal targets are within reach but spending must be closely scrutinized and kept in check, the International Monetary Fund said on Friday.

Economic growth is expected to exceed 13 per cent, supported by the start of oil production late last year and the strong performance of other sectors of the economy, the Fund said at the end of a mission to the West African nation.

The Bank of Ghana left its prime rate unchanged at 12.5 per cent on Thursday, a move welcomed by analysts who say there are upside risks of inflation ticking up, even though the government said it would remain in single digits this year.

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"A preliminary assessment of fiscal performance during the first half of the year shows strong improvements in tax revenues over the same period in 2010," the Fund said.

"Full-year fiscal targets are achievable with continued control over expenditures. The government has also cleared a sizeable part of its previous arrears, which had contributed to high non-performing loans in the banking sector," it added.

Increases in utility tariffs and wages, world oil prices and other external pressures have been cited as factors that could overheat the economy.

Flush with new oil revenues and new sources of financing, Ghana has set out on an ambitious infrastructure and industrial development plan.

"Prospects of a major scaling up of infrastructure investment will place an even higher premium on expenditure restraint in other areas," the IMF said.

The IMF also issued an apparent warning to the authorities about a $3 billion loan from China that Ghana's parliament approved last month.

"A large financing package has been secured on non-concessional terms, and it is important to assess carefully the costs and benefits of the financial arrangement and underlying projects," the IMF said.

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