Budget 2021: 5 % projected growth rate for medium-term is unimpressive – IEA

The Institute of Economic Affairs has described Ghana’s projected 5 percent growth rate as insignificant.

Addressing the press on the 2021 budget statement and economic recovery policy, Director of Research at IEA, Dr J.K Kwakye raised concerns on the need to put innovative policies in place to quicken economic growth.

He explained that Ghana can leverage its untapped resources to deliver a better life for its people.

“In 2021, 5.0% growth is projected. This represents a significant increase, albeit from the low base in 2020. Thereafter, GDP growth is projected to remain virtually flat around 5%.

"We wonder, however, why it should be so. We are a developing country with abundant untapped natural and human resources and excess production capacities. We do not have to resign ourselves to grow at 5% when taking the necessary steps and implementing innovative policies would allow us to grow at 7-9%”, Dr Kwakye stated.

The IEA believes that at that projected growth with a 2 percent population growth, the country’s per capita income is likely to double in 23 years.

“If GDP is to grow at an average of 5% and we take out population growth rate of, say, 2% to get per capita GDP growth of 3%, our maths tells us that it will take us 23 years to double our per capita income from its current level of US$2,000 to US$4,000. This is unacceptable!”

On 12 March 2021, the Caretaker Minister read in Parliament the 2021 Budget on the authority of Ghana’s President per Articles 179 and 180 of the 1992 Constitution of Ghana.

In the 2021 Budget, the Caretaker Minister announced that, as a result of the negative impact of COVID-19 on the lives of many Ghanaians, it was important for the country to ensure fiscal and debt sustainability.

The Caretaker Minister indicated that the GRA will complete the guidelines and practice notes for the implementation of the voluntary disclosure program and Transfer Pricing Regulations, 2020 (L.I. 2412) which were enacted in 2020.