The International Monetary Fund hailed the medium-term outlook for Ghana's oil-fueled economy as positive on Monday, but warned it would have to rein in public finances to keep the public deficit under control.

The comments by IMF senior economist Alfredo Baldini came as President John Atta Mills' government put the final touches to a 2012 budget which will help set the tone of the economy ahead of next year's presidential election.

A revised 2011 budget in July raised this year's public deficit target to 5.1 percent of gross domestic product from 4.1 percent to allow more infrastructure and social spending.

(The medium term outlook) remains positive with risks broadly balanced. External demand for Ghana's exports is expected to remain brisk with considerable upside potential from newly discovered oil fields, Baldini said.

But he added: The government needs to contain the increasing wage bill and adjust other spending to meet the 2011 fiscal deficit target as a share of GDP.

These were the other main points of his statement:

- annual inflation should stay broadly stable at around 8.5 to nine percent next year, slightly higher than last month's 8.40 percent.

- IMF estimates non-oil growth this year at 6-7 pct.

- Current account deficits remain manageable.

- the government appears to have made a dent on payment arrears. The Fund recommended gradual payment of arrears rather than clearing the debts now in order not to jeopardize the current stability of the economy.

- the government needs to closely monitor the pricing of petroleum retail prices because the government is hedging the price of oil.