Ghana must address challenges to sustain macroeconomic growth

Mr Ridle Markus, the Strategist for Research at Barclays Africa, says in order for Ghana to achieve a strong and sustainable macroeconomic environment, it is important that she addresses the short and long-term challenges facing the economy.

Speaking on the topic: “Maintaining a Stable Macro Economy” on the first day of the Ghana Economic Forum in Accra, Mr Markus noted that certain policy issues and challenges had to be addressed in order to sustain the gains made in the macroeconomic environment.

He said investors and rating agencies were concerned about the debt levels, large fiscal and external imbalances, weaker banking sector and fiscal slippages.

In the short term, Ghana, he said, would need to ensure prudent public spending to end slippages, ensure price stability, reduce debt and interest rates and address electricity constraints among other things.

In the long term, he said the high unemployment rate, particularly among the youth, high levels of poverty, and the volatile growth patterns must be addressed as well as bring the informal sector into the formal economy.

“To do this, there is the need for political commitment and willingness to address these challenges and achieve the targets sets out in Ghana’s growth agenda,” he noted, adding that Ghana also needed quality data to help make decisions to inform investors.

Mr Markus said key pillars including good governance, macroeconomic stability with a flexible currency, good fiscal and monetary policies and strong financial institutions and policy coherence were necessary to create a supportive environment for the private sector to freely operate.

This, he said, would give government the space to invest more money and efforts into providing social infrastructure such as education, health and water and sanitation.

Mr Markus said this would also ensure inclusive growth where all sectors of the society would have the same opportunities and equitable income distribution and ensure employment creation.

He noted that while Ghana was seeing improvements in its economic performance with growth on a steady increase, the growth was still mainly driven by the resources.

“Ghana’s economy is becoming increasingly linked to the performance of the commodity cycle,” he said, adding that growth was usually recorded when there was an uptick in the commodities market, which generated opportunities and risks, depending on how it was managed.

Mr Samuel Ackhurst, the Chief Economist at the Ministry of Finance, said government recognised the need for macroeconomic stability and was focused on four main thematic areas that would ensure sustained growth.

These, he said, included revenue and capping of earmarked expenditure policies, debt management and price stability for growth.

Mr Ackhurst said those policies had, so far, been encouraging with inflation under control at 12.1 per cent and the Producer Price Index also reducing as at end of June, 2017.

The external sector was also showing positive results, with the trade balance showing a surplus of about $1.4 billion, after years being in a deficit.

Mr Ackhurst expressed confidence that the macroeconomic growth achieved would be sustained.

The two-day forum, the sixth in series, is on the theme: “Building a Ghanaian Owned Economy, 60 Years after Independence.”

It was organised by the Business and Financial Times in partnership with the Ghana News Agency and GCB Bank among others with Barclays Bank as the lead sponsor.