PEF reviews 2003 budget

Dr Augustine Fritz Gockel, Senior Lecturer at the Department of Economics, University of Ghana, on Wednesday questioned the continued recording of actual projected figures of GDP each year and called on the Government Statistician to explain the cause of the phenomenon.

He said: "When we look at the GDP performance in 2001, the nominal GDP projection of 38,014 billion cedis was exactly achieved to give a real GDP growth rate of 4.2 per cent using a percentage GDP deflator of 34.7 per cent.

"In 2002, although the projected nominal GDP of 46,875 billion cedis was exceeded when provisional estimates put the budgetary out-turn at 47,764 billion cedis, the projected real GDP growth rate of 4.4 per cent was what turned out to be actual."

Deflator is statistical factor or device designed to adjust the difference between values unaffected by inflation, called real or constant values, and the value as affected by inflation, called nominal or dollar values.

Dr Gockel, who was speaking at a seminar to review the 2003 budget statement organised by Private Enterprise Foundation (PEF) said: "I think we must this time call on the government statistician to educate us on several of these fine tunings."

The seminar, sponsored by the United Nations Development Programme (UNDP) formed part of an annual review of the national budget to enable the PEF identify areas of concern with the aim of making recommendations to the government to help move the private sector forward.

Dr Gockel explained that it was rarely possible to continue to achieve the exact figures of macro economic targets over a number of years.

He said for 2003, government had set general targets to strengthen the tax base, reduce the burden of domestic debt and improve public expenditure management.

The targets also set out to allocate resources efficiently, according to the designated priorities in the Ghana Poverty Reduction Strategy (GPRS) now the Growth and Poverty Reduction Strategy.

Specific indicators for the year, among other indices, are GDP growth rate of at least 4.7 per cent; reduction of inflation from 15.2 to nine per cent; budget deficit equivalent to 3.6 per cent of GDP and domestic primary budget surplus of three per cent of GDP.

On the implications of the indicators of the targets and whether they were achievable, Dr Gockel said there was the need for government to exercise caution on several grounds in implementing policies geared to achieve, primarily the GDP target.

He explained that besides the very mediocre performance of 3.7 per cent in 2000, the GDP growth rates experienced in 2001 and 2002 were not substantially different from historical antecedents since 1996.

"Secondly, the statistical basis, as researchers on Ghana's economy have persistently noted are not exactly convincing," Dr Gockel said.

He also warned that the "well deserved ambition of raising per capita income to at least 1,000 dollars in the foreseeable future would require growth rates that are at least twice what they are now".

Dr Gockel said the targets of the 2003 budget required that the government worked to overcome the macro economic setbacks which included the hybrid set of problems in the manufacturing sector and to ensure that the exchange rates for the cedi would not be overvalued.