Ghana leader vows to cut deficit and build roads

Ghana's President John Dramani Mahama outlined plans to cut a ballooning deficit and build infrastructure on Thursday as he gave his first state of the nation address since winning December elections.

He pledged to expand roads, schools and health services, tamp down on public sector wages and improve revenue collection in the region's second-largest economy, a major producer of gold and cocoa with a nascent oil industry.

"There is still a lot more to be done to further reduce poverty, expand infrastructure and provide more social services for our people," Mahama told parliament. "These challenges are formidable, but they are not insurmountable."

Seen as a success story in turbulent west Africa, Ghana's economy grew by 14 percent in 2011, boosted by exports of gold, cocoa and oil, which it began producing in 2010.

Ghana's economy was however hit by bad news last week when the government announced that the deficit had risen to 12.1 percent of gross domestic product, almost double their previous target.

Rating agency Fitch downgraded the outlook on Ghana's credit rating from "stable" to "negative", and the National Petroleum Authority took the controversial step of cutting subsidies that keep fuel prices stable.

In the nearly hour-and-a-half-long speech, Mahama pledged to build 200 new high schools, a new university and kindergarten facilities at all public schools over the next four years.

Responding to the deficit growth, Mahama took aim at public sector wages and also at Ghana's revenue collection, which lags behind other countries on the continent.

"The people of Ghana demand better service from our public sector employees commensurate to the investment made in their remuneration," he said.

Mahama also reiterated his intolerance for refugees using Ghana as a base to threaten other countries. A UN report last year accused supporters of former Ivory Coast president Laurent Gbagbo of using the country as a staging point to attack the regime of President Alassane Ouattara.

Over the last two months, Ghana has extradited three associates of Gbagbo to Abidjan.

"I wish once again to assure any refugees on our territory that they are welcome guests as long as they do not use Ghana as a base to destabilise the governments in their home countries," the president said.

The December election won by Mahama in the country of some 25 million people was deemed free and fair by observers, but the opposition has alleged fraud and is challenging the results.