No drop in inflation in first year of new government

An economist on Wednesday predicted an unlikely drop in the inflation rate within the first year of the new Ghanaian administration, citing the weak economic fundamentals, notably fiscal imbalance due to huge government expenditure and the burden of domestic and external debts.

Dr Anthony Akoto-Osei, a research fellow at CEPA said this would not permit any sharp drop in the rate of about 40.5 per cent as at December last year in the short term.

Dr Akoto -Osei was speaking at a Trade Union Leadership Workshop in Accra on the state of the economy, after almost two decades of structural adjustment.

General secretaries of the various Unions and their deputies are attending the workshop on the theme: "Redefining the role of trade unions in socio-economic Development of Ghana."

It was to help the leadership to appreciate the economic situations of the country better vis-a-vis the traditional role to intervene on behalf of labour.

Dr Akoto-Osei attributed the economic crisis largely to budget imbalances that emerged in the latter part of 1999 and shortfall in revenue as a result of a fall in cocoa and gold prices on the world market.

He ruled out a cut in government expenditure almost immediately, but emphasised the need for effective control and monitoring mechanisms of such expenditures to prevent leakage and ensure that monies released for particular projects are not diverted.

"As far as possible government spending should be programmed in such a way to achieve medium term goals of human capacity development," Dr Akoto-Osei stressed.

He called for re-direction of attention to the agricultural sector, saying that any significant change in the performance of the economy will depend to a large extent on that sector's performance.

Dr Akoto-Osei suggested an intensive export diversification drive to reverse the structural defects of over-reliance on few export commodities for revenue.

On the convergence criteria for a single currency, Dr Akoto-Osei said the goals of a single digit inflation, a foreign exchange reserve equivalent to four months of export by the year 2003 are unattainable and called for the redefinition of the goals.

Mr Kwasi Adu-Amankwah, TUC Secretary-General said the workshop is a follow-up to discuss results from the union's project on the impact of structural adjustment on housing, health, and environment, among others.

He said the future of TUC is linked to the performance of the economy and it is important that as the leadership of workers they understand the issues at stake in their negotiations at enterprise and macro levels.

Mr Adu-Amankwah said the interest of the worker remains high on the agenda of the union.