Ghana's economy in tatters – ISSER

Professor Felix Asante, Director of the Institute of Statistical, Social and Economic Research (ISSER) has indicated that signs on the wall points to the fact that the Ghanaian economy is not robust, as the Finance Minister wants Ghanaians to believe.

He said it would not be totally true for anyone to argue that the country’s economic status is anything to boast of, given the current mishaps the economy is faced with.

According to him, a robust economy could be determined in a number of ways, which includes the rise and fall of commodity prices.

His comment comes at a time when the President and to a large extent, the NDC communicators are everywhere boasting of a resilient economy.

Speaking to The Chronicle exclusively in Accra yesterday, he noted that debt deficit and issues of debt to the Gross Domestic Product (GDP) ratio are factors that showed how poor the economy is performing.

He urged that the country would have to change its dynamics if it intends to solidify the economy. “We need to get more values from our exports.”

He cited that the intention of government on the economy was perfect but the implementation of the fiscal discipline is another chapter to deal with.

Giving a presentation at a breakfast meeting organized by the Graphic Communications Group Limited in collaboration with Stanbic Bank, Prof. Asante noted that inflation rate should be stabilized so that businesses could have grounds to develop.

Speaking on the theme, election year budget deficit: implications for the macro-economic stability, he observed that an analysis of Ghana’s deficit since 1996 showed that majority of the low points (high deficits) have been in election years and it takes the subsequent 3 years to realign the deficit and pile up the deficit again in the next election year and the cycle continues.

He added that, on the back of poor economic performances of 1998 and 1999, 2000 was exacerbated by both external and internal factors. Prof Asante further noted that the economy was characterized by high inflation, high interest rates, rapid currency depreciation and unsustainable debt position.

“The 2004 budget statement and economic policy aimed to reduce and stabilize domestic debt while expanding development and social spending in order to propel growth and reduce poverty. Therefore, the target of this budget was to improve the primary balance and reduce the fiscal deficit.

“The high expenditure in 2004 was mainly due to unplanned higher wage bills, subsidy on petroleum products and servicing the domestic debts of TOR, ECG, Ghana Water Company and other unbudgeted capital expenses,” he noted.

Looking at the component s of discretionary expenditure in 2012, he added, one notes that it was mainly repayment of domestic debt, personal emoluments, payment of arrears and total investment which were all important contributions to the almost doubling of expenditure in the year.

However, he advised government to remain firm in its commitment not to get carried away by the pressure to spend. He cited that the 2010 experience offered the most recnt example.

“Hopefully, the passage of the Public Financial Management Bill (2016) will offer some respite to the managers of public finances from political pressure to spend.

“Controlling expenditure in the last quarter will send good signals to the investment community and can translate in increased investment and economic activity post elections,” he remarked

The Finance Minister, during his presentation at the same programme, said the misalignment of fiscal space due to budget deficits is a threat to fiscal, macroeconomic and constitutional mandate of government.

He indicated that Ghana could use the oil and gas dispensation to move away from the phenomenon. Meanwhile Prof. Felix Asante urged that the over expectation of the country before oil country making the nation unable to manage it well.

Ostensibly, President John Dramani Mahama has opined recently that government would take measures that would re-invigorate and stabilize the economy, www.ghana.gov.gh has reported. The report said apart from establishing and identifying some of the challenges with the International Monetary Fund (IMF) and setting out the economic realities, the government would also discuss implications of the IMF assistance.

President Mahama said this when he addressed ministers and deputy ministers, presidential staffers, the majority leadership in Parliament and the National Democratic Congress hierarchy at the opening of a day’s retreat on the theme: “Understanding the implications of government’s relations with the IMF” in Accra