Ghana’s economy has been described as dynamically unstable and inflation was unlikely to decline if serious measures were not taken. This has been possible due to the high deficits, debts, inflation, distortions and the numerous disparities that existed.
Speaking at a day’s seminar to throw light on contemporary macro-economic issues and how they affected Ghana’s developmental agenda, Dr Robert Darko Osei, Senior Research Fellow of the Institute of Statistical, Social and Economic Research (ISSER) of the University of Ghana,, said Ghana’s problems have been due to political economy and politics of economic management.
The seminar, which was organized by the Institute in collaboration with the United Nations Development Programme (UNDP), was on the theme "Efficiently Expanding Fiscal Pace to Promote Inclusive Growth and MDG Acceleration in the Country".
Dr Darko Osei explained that a study conducted in 2011 reviewed the potential for expanding fiscal space to support human development objectives along its four main ‘pillars’: Domestic Revenue, Official Development Aid (ODA), Borrowing and Increased Efficiency and Reallocation, in the light of Ghana’s recent socio-economic performance and the challenges ahead.
He noted that Ghana’s performance for 2013 was characterized by rapid growth with rising, deficit and more debts, while the 2014 Budget also did not constructively respond to the existing and emerging issues.
He said Ghana also faced a number of macro-economic challenges which might jeopardize its continuing progress towards achieving the Millennium Development Goals (MDGs) and the promotion of human development.
Ghana, he explained, was far from achieving MDGs targets on maternal health, infant mortality, and sanitation, but has been close to achieving the other five goals.
He suggested that the principal means for creating additional fiscal space to boost progress towards the MDGs by 2015 will come from adjustments within the Ghanaian budget.
“The key elements will be the re-allocation of expenditure, more effective revenue generation, improvements in efficiency of public sector operations, and cuts in some of the least productive activities”.
Speaking on the slippages , Dr Darko Osei said the fiscal and debt situations have deteriorated as a result of internal budgetary slippages, pressure for large increases in recurrent expenditures (some of which are related to the MDG targets), and external developments, especially the spill-over effects of the international financial collapse.
He said the principal means for creating additional fiscal space to boost progress towards the MDGs by the 2015 benchmark, will come from increased efficiency, and re-allocation of expenditures within the Ghanaian budget, and urged government to consider otherwise.
He urged government to create additional fiscal space by measures that improved macro-economic management, so as to raise the rate of economic growth.
“Specific actions related to deficit reduction, bringing the national debt back into conformity with long term sustainability criteria, maintaining a competitive exchange rate, and reducing the regulatory burden will also help re-balance the economy and stimulate private sector activity, particularly among small-scale operators”.
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