Home-grown policies unlock Ghana’s economic growth potential
“No doubt, this has contributed to a very clear turnaround story that now shines the nation’s path to a well-planned bright positive prospects for the economy,” Terkper told legislators on Monday.
It is getting better, with the economy growing by 4.9 per cent in the first quarter of 2016
Terkper was asking the lawmakers to endorse a 1.88 billion-cedi ($470 million) supplementary budget that largely focuses on infrastructure development programmes.
“Several daunting domestic and international challenges did not hinder our determination to change course,” he said, “the strategic focus enabled us to pursue very active infrastructure and development programmes. This is also the basis for the turnaround and the course for pursuing a very robust growth agenda for the near-to-medium term.”
Ghana launched a 25-page “Home Grown” policies in 2015, which became part of the International Monetary Fund’s $918 million programme with the West African country.
The country’s economy reeled for the past two years with public debt climbing to over 60 per cent of gross domestic product (GDP) and inflationary pressures heightening, while businesses cried over erratic power supply and unstable currency.
The government said the home-made policies were designed to achieve fiscal consolidation and to address short-term vulnerabilities, trim the high budget deficit that impedes private sector growth. It was also meant to steady and reverse the rise in the country’s post highly indebted poor countries public debt.
“We are on course to achieving these goals through management of prudent fiscal, financial, sectorial, and monetary policies,” Terkper said, quoting broad statistics to prove his point.
Provisional fiscal data up to December 2015 show that total revenue and grants were higher than the budget targets by 5 per cent while overrun in total expenditures, including arrears, narrowed to 2.1 per cent above target.
The performances led to a cash budget deficit of 6.3 per cent of GDP, better than the budget target of 7.3 per cent and 10.2 per cent in 2014.
The 0.2 per cent of GDP recorded at the end of 2015, the primary budget balance – showed Ghana’s ability to service its loans for development, Terkper said [this] was a surplus for the first time in over a decade. The GDP also grew by 3.9 per cent at the end of 2015, an improvement over the projected 3.5 per cent.
“It is getting better, with the economy growing by 4.9 per cent in the first quarter of 2016, compared to 4.5 per cent for the same period in 2015,” he said. “In spite of unanticipated shortfalls in price and production of crude oil, GDP growth is projected to end the year at 4.1 per cent or better.”
Ghana’s public debt level quickened from a low 26 per cent in 2006 – with the steepest post-HIPC increase of 31 per cent in 2007 – to approximately 72 per cent by December 2015.
“We note that HIPC reduced the public debt from over 150 per cent of GDP to 26 per cent and created significant borrowing space, that era ended with the increase in public debt above sustainable levels.”
“The budget deficit is also narrowing, as we raise more domestic revenues and curtail expenditure overruns. Though the debt level is declining, we are able to continue the rapid expansion of infrastructure through prudent project management.
“The currency has been fairly stable and private sector confidence is bouncing back, all these point to a turnaround and very bright prospects for the economy.”