Ghana’s economy expanded to GH¢71.8 Billion

Compared to the gloomy global economic picture, oil and other sectors have expanded Ghana’s economy from GH¢30 billion in 2008 to GH¢71.8 billion at the end of 2012, according to the Minister of Finance, Seth Terkper.

He explained: “This testifies that output from all sectors of the Ghanaian economy (not just oil and gas) has grown in leaps and bounds”.

It is anticipated that the economy will achieve a growth rate of between 8.5 and 9.0 percent at the end of 2012, when the final Gross Domestic Product (GDP) estimates are updated by end April 2013.

GDP is defined as the total market value of all final goods and services produced in a country in a given period, usually a year or quarterly.

The global economy remained fragile in 2012 following four years of weak and uneven recovery notably the persistent Euro-zone debt crises and the uncertainty surrounding the fiscal issues in the United States.

Therefore, Ghana’s 2012 provisional growth rate of 7.1 percent is still high given that it is on top of the growth rate of 14.4 percent recorded in 2011 when the GDP first reflected the impact of crude oil production in commercial quantities, according to the 2013 Budget Statement and Economic Policy of Ghana.

Moreover, the 2012 provisional growth rate compares favourably with the global growth of 3.2 percent and sub-Saharan Africa growth of 4.8 percent, the International Monetary Fund (IMF’s) World Economic Outlook (Jan 23, 2013).

Mr Terkper patted the back of the government as he put it: “we have achieved macroeconomic stability and growth on the basis of strong real and external sector performance, including low rates of inflation and the build-up of substantial foreign exchange reserves.”

He continued: “We have achieved these goals against the backdrop of the global financial crisis; we have also acted decisively to implement policies that address the challenges that occasionally confront our forward march”.

However, Mr. Terkper noted that Ghana’s journey to attain macro-economic stability over the past four years had not always been smooth because they were still vulnerable to several external and domestic shocks, saying: “These require decisive and immediate correction at all times”.

During the first half of 2012, the cedi came under speculative attack and despite an election year, the Bank of Ghana and Ministry of Finance (MoF) implemented measures to stabilize the foreign exchange and reserve situations.

The correction of economic threats is an obligation that managers of the Ghanaian economy could not compromise.

Mr. Terkper who over the management of the Ghana’s from his boss, Dr. Kwabena Duffuor indicated that they need to work harder than ever to consolidate the economic fundamentals that have been built over the years.

With the consolidation of these fundamentals the transition from a lower middle income country to a middle income country will be easier.

The Bank of Ghana and the Ministry of Finance will continue to install early warning mechanisms and programs to carefully identify and manage all sources of fiscal and monetary risks to the budget and financial framework.

In fulfillment of government promise of improving the conditions of service and productivity in the public service, the government undertook to implement the Single Spine Salary Structure (SSSS); an obligation that was bequeathed by the previous Administration on the very eve of its departure from power, the Minister stated.

Nonetheless, Mr Terkper pointed out that in the interest of social and industrial harmony the government proceeded with the roll-out, adding the Mahama-led Government was mindful of the need to stop the continuing exodus of quality staff, improve salary levels and attract critical skill to enhance productivity.

Furthermore, he noted: “The demands and pressures that came in the wake of the implementation of the scheme compelled government to shorten the five year implementation stretch.

This has created the situation where compensation to public sector workers grew overnight to 72.3 percent of tax revenue (including oil) as at end December 2012: a figure that is in fact higher than the 60.9 per cent in November 2012 as cited in the State of the Nation address”.

This outcome has crowded out the fiscal space for spending on critical social intervention and other infrastructure programmes.

At this stage, there is therefore need to strike a balance between (a) public sector productivity and remuneration and (b) the equally important allocation of national revenues to expenditures on goods and services, and investments.

The West African country aims at achieving this through increased national output and higher levels of revenue mobilization.