Wednesday, May 20, 2015

"The Ghanaian economy will soon return to 8% growth" - Finance Minister Seth Terkper

Finance Minister Seth Terkper is confident that Ghana's ailing economy will return to spectacular growth in view of progressive policies and measures adopted by government.

He said there was every indication that this will happen sooner than later even though similar projections in the past haven't really materialised.

Mr. Terkper just finished an introspective look at the economy and concludes that discipline is non-negotiable if government is to meet the aspirations of its people.

"It is either we discipline ourselves or dissipate the opportunities that will arise when the economy shows any gain," the pilot of Ghana's economy said at a gathering in Accra Wednesday.

His conclusions came at a presentation of the state of the economy where the minister shared some lessons learnt after Ghana’s promising economic flight was shot down in 2013.

Huge budget deficits gutted important macroeconomic gains, Seth Terpker recognized.

Once in a ditch, Ghana’s economic rescue ropes snapped after falls in the prices of gold, cocoa and crude oil for over a year.

If these were outside the control of government, its expenditure wasn’t and budget over-runs deepened Ghana’s woes, some economic analysts have said.

The picture got grimmer when the nation got darker because the careless activity of a pirate ship clipped the gas pipeline in Togo’s waters, the minister explained.

Ghana, he said suffered “two-year disruption of gas supply” and two years of “shifting” excuses from managers of the gas pipeline, Nigeria until a government suffering from limited cash-flows now needed more than ever to import light crude oil to power the nation.

In 2013 and 2014, there is no money to pay all statutory obligations, a technical term for a situation where government owed hospitals, contractors, MPs' common fund among a tall list of debts.

According to Seth Terkper, in these trying times, government adopted some home grown policies which are basically what the IMF agreed with government on and accepted to grant a $1 billion rescue package to Ghana.

Among some lessons learnt, Seth Terkper pointed out that using the budget to finance commercial projects is a bad idea.

This is how come the gang of six projects started in 2007 are suffering to date, he noted.

The six projects are Extension of La-Teshie Roads (1st Infantry Brigade to Teshie Link); Emergency Road Rehab of Dansoman Main Road, Selected Collectors, Nima Highway Dadeban Road and Palace Street; Emergency Road Rehab of Spintex Road and East Legon, Roads and Culverts on Spintex Road 1; Reconstruction of Sunyani Road (Including Sofoline Interchange); Tetteh Quarshie-Madina; and Achimota-Ofankor.

 Even U.S, even Germany despite its big budgets does not finance commercial projects unsing the budget, he explained.

Government will now rely on bonds and banks that can provide long-term financing of projects.

He also expects that commercial projects should make enough profit to pay for the loans used to fund it. Getting tax-payer to pay for these loans is not a desirable option any longer, Seth Terkper assured.

Henceforth, he said government will also start paying both the principal of loans than wait for the loans to mature before paying.

He called it “waiting for the bullet”. But not any longer, the minister insisted. Ghana will be following the example of Philippines, Gabon, Cameroon and Rwanda, he promised.

Government through Cabinet also agreed to use 50% of the Stabilisation Fund which is Ghana’s oil revenue to support the budget after revenue shortfalls because of declining prices of Ghana’s exports.

Through debt management strategies, the deficit is expected to be down to 3 to 4% and more revenue inflows have been coming in because of increasing oil prices.

Government will have to also tackle subsidies on petroleum which he said is hurting government.

All in all, the future of Ghana is bright in the medium term because things are turning around. Power situation will soon stabilize and recovery signs are strong.

He assured saying “growth will rebound” and the economic flight troubled in 2012 will resume.

But without discipline, this flight and gains could be dissipated and fears of sliding back from a transitioning middle-income country to a developing country will be all too known.

MyJoyOnline

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