Ghana needs long-term economic plan to take off - IEA

Accra, Dec. 6, GNA - Ghana is currently at a favourable position to significantly reduce poverty but that would depend on policy consistency and a long-term economic plan, Dr John Asafu-Adjaye, Senior Fellow at the Institute of Economic Affairs, said on Wednesday.

He said given the positive economic outlook and debt relief of the country, Ghana could make significant inroads into poverty reduction but noted that the Growth and Poverty-Reduction Strategy II (GPRS II) was basically a medium-term framework.

Speaking at a roundtable on: "Maximising Ghana's Debt Relief: What are the Policy Options?" Dr Asafu-Adjaye said a long-term strategy that looked well beyond 2015 would set out credible strategy for growth and wealth creation.

"This plan should also include a strategy for addressing the problem of income inequality," he said.

He said attaining economic growth was necessary, but not a sufficient condition for overcoming poverty. He said to achieve growth with equity, specific anti-poverty measures such as development of income generating activities based on local resources and local organisations must be incorporated into economic planning.

Ghana's current debt payment position, Dr Asafu-Adjaye said, was strong given a net present value of GDP as 19.8 per cent which fell in the high ranking threshold of the IMF. However, the country ought to be concerned about debt sustainability since it was still a small country and, therefore, vulnerable to external shocks.

He said to ensure sustainability there was the need for a vigorous economic growth that must be driven by a buoyant and diversified export sector.

"Again, Foreign Direct Investment (FDI) is important in terms of augmenting external capital," Dr Asafu-Adjaye said, explaining that a steady flow of FDI reduced Government's external borrowing requirements in some areas and thereby enhancing debt sustainability. He said the country needed prudent borrowing strategies, which required strict guidelines for non-concessional loans that would go into projects with significant social and economic net benefits. On trade policy, Dr Asafu-Adjaye said the current GPRS II paper did not adequately address the issue of trade liberalisation or trade openness in the context of the impending Economic Partnership Agreement (EPA) with the European Union and the eventual implementation of the Doha Round.

He kicked against an overnight switch to full trade liberalisation and advocated a gradual transition. 6 Dec. 06