Ghana's Oil to boost GDP growth to 10 % in 2011

The economy is estimated to grow between eight and 10 per cent in 2011, on the back of the newly discovered oil.

Economic growth is expected to recover modestly to 6.5 per cent in 2010, benefiting from the global recovery and exceptional public investment in the new oil sector,

Economic performance in 2010 is expected to be hugely shaped by investments in oil-related infrastructure while 2011 growth is expected to be influenced strongly by revenues from the oil exports.

Available data made known to B&FT indicates that the country would realize at least one billion dollars per annum over the next twenty years as revenue from oil, this represents some 25 per cent of current tax revenue or some six per cent of GDP; barely adequate to make up for the current government deficits.

Dr. Charles Ackah, Institute of Statistical Social and Economic Research, making a presentation in Accra last week under the topic ‘The Economy of Ghana and Outlook: Implications for Doing Business,’ observed that government must continue to make efforts at enhancing the tax administration to increase non-oil revenue mobilization.

Current effort still aims at improving efficiency of the tax system by reforming the tax administration in the country, he stated.

This, he said, entails broadening the operations of the Large Taxpayer Unit to ensure that very large companies receive a one-stop tax service.

Already the signs have begun to show as tax revenue as a percentage of Gross Domestic Product (GDP) has increased from less than 17 per cent to about 23 per cent over the period 2000 to 2009.

Dr. Ackah advised government to have a more diversified economic base which will reduce dependence on a few primary commodities and facilitate much more sustainable growth and development.

“In this regard, policy responses should include a rethinking of the country’s trade and industrial strategies.

“Despite years of impressive economic performance, the fact still remains that Ghana’s economy is still bedeviled with huge structural challenges,” Dr. Ackah explained.

According to the World Bank’s Doing Business Report, Ghana’s rank declined 5 positions from 87 in 2008 to 92 out of 183 countries in 2009.

High cost of borrowing and the high rate of inflation are among the major challenges faced by businesses in Ghana.

A fairly high percentage of companies surveyed by the WB report that they expect to pay bribes to public officials to ‘get things done’ such as securing an operating license, meeting tax obligations and securing government contracts.

The survey also indicates that the burden of customs procedures in Ghana is quite cumbersome and constitutes a competitive disadvantage.