Analysis done by the Centre for Policy Analysis (CEPA) on the Ghanaian economy has indicated that Ghana’s external payments situation has deteriorated in 2007 compared with 2006 as the country’s import bill continued to grow twice the size of her receipts from exporting to the rest of the world.
Launching its annual flagship publication of the economy with the title ‘Ghana Economic Review and Outlook 2007’, the Executive Director of CEPA, Dr. Joe Abbey said the overall balance payment position turned from a surplus of US$272 million in the first half of 2006 to a deficit of US$124 million in the first half of 2007. A country’s balance of payments is the record of transactions between its residents and foreign residents over a specified period.
He said the worsening situation was largely on the account of widening of the deficit on both trade and current accounts of the balance payments.
In the first half of 2007, the deficit on trade accounts reportedly rose from 10.3 per cent of GDPO at the end of June 2006 to 133.3 per cent of GDP, the highest level since 2004.
This situation with respect to current account, however, has been no better, as it turned from surplus of 1.0 per cent of GDP in 2006 to a deficit equivalent to 6.7% of GDP at the end off June 2007.
He said the continuing nominal and real depreciation of the cedi vis-à-vis the currencies of Ghana’s major trading partners, increasing hikes in the price of crude oil on international markets together with the compelling need to import substantial; amounts of crude oil and petroleum-related products to fuel diesel-powered generators on account of the hydro-generation problems with Akosombo power station have meant a 22.4% rise in the import bill to US$33.739 million in the first half of the year compared with the same period in 2006.
To accelerate growth and get Ghana on the path toward the medium-term goal of middle-income status by 2015, Dr. Abbey stressed that Ghana would have to face up to major policy challenges including strengthening macroeconomic stability; improving productivity and innovation; closing the infrastructure gaps (especially in the areas of energy, water, sanitation and feeder roads); and strengthening the investment climate.
According to him, these four together with institution/capacity building appear to be the “binding constraints” to accelerated growth in the sense that there is high payoff in terms of additional growth that would ensue if they are addressed head on.
He said meeting each of these would require further policy improvement and gains in efficiency.
