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Government’s target of achieving a growth rate of 6.8 percent in the 2018 fiscal year is not ambitious enough given the strong economic performance recorded this year, a Partner at KPMG, Andy Akoto, has said.
According to Mr. Akoto, government has so far posted a strong macroeconomic performance with all the indicators such as growth, deficit, and inflation among others moving in the right direction, and thus he would have expected a more robust growth to have been targetted by government.
The growth target for this year is estimated at 6.3 percent – but with the economy growing as much 7.9 percent as at first half of this year, the Partner said government should have set its sights on a bigger growth target to reflect the kind of ambition this government has so far demonstrated.
“Given the way the economy has performed this year, I would have expected a bit more going into next year, because all the indicators are going in the right direction. The economy has fairly stabilised, investor confidence is up and exports are growing.
“But the critical thing will be how we are able to put people to work and improve the productive base. Because if we are able to expand the productive base, by natural consequence, we will be able to get agriculture taking a lot more people – even services have been a bit more sharpened to focus on the productive sector rather than imports.
“Hopefully, we might be able to exceed the target; maybe it is just government being a bit more conservative in this respect, but there’s every indication that target can be exceeded,” Mr. Akoto told the B&FT on the sidelines of the KPMG post-2018 Budget Forum held on Monday.
The theme of the Forum was ‘Government’s Fiscal Policies: Achieving Sustainable Growth in a Digital Age’, and was attended by a cross-section of industry players who wanted to know what impact the budget would have on their respective industries.
Oil induced growth
Presenting government’s 2018 budget statement and economic policy, Finance Minister Ken Ofori-Atta revealed that the provisional GDP growth for 2017 is estimated at 7.9 percent – with non-oil growth of about 5 percent.
Despite the strong performance, economists have expressed worry over the lower than expected growth of the non-oil sector. Fiscal policy think-tank, Institute for Fiscal Studies (IFS), has consistently lamented that the lagging non-oil sector impacts the majority of Ghanaians and thus its suppression is troublesome.
The institute, prior to presentation of the budget, thus made strong calls for government to come up with policy initiatives geared at revamping the non-oil sector, particularly agriculture and manufacturing, to ensure balanced growth of the economy.
The 2018 budget in response outlined a raft of measures – such as tariff cuts by as much as 21 percent for industry, tax rebates for young entrepreneurs, and a comprehensive plan to boost the agriculture sector’s productivity.
The Finance Minister stated that the policies outlined in the budget are not only targetted at ensuring macroeconomic stability and growing the economy for job-creation, but should also help in protecting social spending.
With overall GDP expected to grow at 6.8 percent, the non-oil GDP is being estimated to grow at a rate of 5.4 percent – a significant increase on the 4.8 percent expected at the end of this year.
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