Dr John Kwabena Kwakyi has said Ghana in 2011 posted the highest rate of GDP growth worldwide with over 14 per cent which was driven by oil-fueled economy and a strong growth in the industry.
He said it was equally important that the economic growth spreads to other non-oil sectors to generate more jobs.
Dr Kwakyi, a Senior Economist of the Institute of Economic Affairs (IEA), made these known when he addressed the media in Accra as part of the IEA’s review of the economy for the second half of 2011.
In the review which focused on real, fiscal and external sectors of the economy, Dr Kwakye explained that, though the country’s growth potential was huge, there was still high unutilized industrial and human capacity as a result of insufficient jobs.
He said “as a matter of fact, Ghana needs to sustain a sufficiently high rate of growth if all the Millennium Development Goals (MDGs) are to be attained and Ghana’s per capita income is to reach higher levels and join the middle-income group of countries”.
He expressed worry about the country’s cash budget which recorded a deficit of 2.2 per cent of GDP, bringing the deficit for the whole year to 4.4 per cent which is marginally higher than the budget estimate.
Other highlights of the review includes: annual revenues and expenditure were both higher than budgeted; tax revenue and grants exceeded their targets while non-tax revenue fell short of its target; recurrent expenditure was lower; spending on the public sector wage bill and transfers which include statutory payments and subsidies continue to rise and place undue strain on the budget”.
“To increase the budgetary impact on growth while fostering macroeconomic stability, it is important to take measures to increase revenues while prioritizing expenditure,” he said.
On domestic debt, Dr Kwakye said that Ghana’s domestic debt increased by 9.7 per cent to GH? 11,841.1 million (20.0 percent of GDP), external debt increased by 7.2 per cent to 7,589.5 million dollars (19.9 per cent of GDP) bringing the total debt to 10.0 per cent which is GH? 23,608.5 million (39.9 per cent of GDP).
“From a low post-HIPC and MDRI level, Ghana’s debt has been rising as a result of more borrowing. While the GDP rebasing and oil production have increased Ghana’s capacity to carry higher debt at sustainable levels, it is important that the debt is applied to high-return projects to boost economic growth and thereby ease the burden of future repayments”, he added.
Dr Kwakye expressed worry about the steep depreciation of the cedi against both the dollar and the pound whiles it gained against the euro, and called on government to find a solution to the problem.**
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