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Africa Economy: Ghana upbeat about prospects of economic recovery

Xinhua, May 21, 2015 Adjust font size:

The government of Ghana expressed great optimism here on Wednesday about the prospects of the recovery of the country's economy.

Minister of Finance Seth Terkper said the economy was set to recover at a quicker pace than many had projected.

The minister made this projection during a forum that saw captains of industry, commerce, policy makers, technocrats and ordinary citizens attending.

Ghana's economic growth, which peaked at around 15 percent in 2011, declined to about 4.4 percent in 2014.

However, Terkper was optimistic that the economy would soon return to the winning ways and experience the 8 percent growth and above based on the analysis of some indicators.

But for this to see reality, the minister said discipline was required, adding that discipline was non-negotiable in the scheme of things in the economy.

"We either discipline ourselves or dissipate the opportunities that will arise when the economy shows any gain," he stressed.

Some of the indicators that made the minister upbeat were the debt sustainability in the face of current global challenges.

According to him, over the last few weeks, over 3 billion Ghana Cedis (811 million U.S. dollars) of the country's total debt had been cleared.

The payment of the debt will significantly reduce the pressure on government in the servicing of other existing loans and financial agreements, said the minister.

Fiscal slippage for three continuous years has forced the government to enter into a three-year program with the International Monetary Fund (IMF) to resuscitate the lowering embers of growth and fiscal discipline in budget implementation.

Wage bill to Gross Domestic Product (GDP) ratio, which stood at 8.9 percent in 2012, came down steadily to 8.3 percent at the end of last year.

"It is expected that this will further decline to 7.7 percent in 2015," Terkper projected, as wage bill arrears cleared as a ratio to tax revenue has declined from 68.2 percent in 2012 to 52. 1 percent in 2014 as government projects to bring it down further to 46.1 percent at the end of this year.

However, in spite of these achievements, the minister conceded that progress in reducing fiscal deficit had been slow, partly due to the two-year long shortage in gas supply from the West African Gas Pipeline to power part of Ghana's energy plants.

Terkper said commodity price shocks, namely the decline in gold and cocoa prices, which affected government revenue, as well as the current projected shortfall in oil prices were some of the causes of the fiscal challenges.

"Given government's commitment to fiscal consolidation, the 2015 budget outlines additional measures and reforms which form a significant part of the measures in the program with the IMF.

"These measures in addition to earlier ones are expected to result in a significant reduction in fiscal deficit to ensure debt sustainability and macroeconomic stability," the minister added.

In a quick intervention, Governor of the Bank of Ghana, Henry Kofi Wampah, reiterated the commitment of the central bank not to finance government's fiscal deficit beyond 5.0 percent of the previous year's budgeted revenue. Endi