Government
is set to miss most of its macroeconomic targets for 2014 to cap a year that has
seen the country’s currency – the cedi -- depreciate greatly against all the major
trading currencies.
The
only macroeconomic target government is on course to achieve this year is gross
international reserves of not less than three months import cover for goods and
services.
The
Finance Minister Seth Tekper reviewed downward most of government’s targets when
he presented the mid-year budget review to parliament in July, but provisional
figures and trend analysis show that all but one of the revised targets will also
be missed.
Already,
the Ghana Statistical Service (GSS) has cut GDP growth rate for this year by
0.2 percent based on provisional data gathered. According to the GSS, which in
October released its provisional GDP based on available information as at the
end of June 2014, the economy is estimated to expand by 6.9 percent -- down
from a revised target of 7.1 percent and the 2013 growth of 7.6 percent.
The
projected GDP growth of 6.9 percent by the Statistical Service, it is feared,
could also be missed as the international price of oil -- which is expected to
contribute 0.5 percent to the country’s overall economic growth -- is currently
witnessing a downward spiral.
At
the same time, energy disruptions have forced many companies to cut production
output; putting pressure on the already weakening growth momentum.
To
make matters worse, growth and investment have remained low and an absence of
new job opportunities has meant more and more young educated people are out of
work.
Prices
on the other hand continue to rise, with November inflation increasing to 17
percent to put government’s end of year inflation target of at most 15 percent
out of reach; especially as the Christmas season -- a period associated with
high spending -- is expected to boost spending and pile pressure on consumer
pockets.
Indeed,
the central bank in its inflation outlook report in November warned that government’s
inflation target would not be actualises as fiscal vulnerabilities, exchange
rate pressures, and inflation expectations pose significant risks to inflation.
On
the fiscal side revenue shortfalls, overruns in the wage bill, and rising
interest costs are expected to push this year’s deficit beyond the target of
8.8 percent of GDP. As of now, government’s budget deficit is hovering around
9.8 percent.
Data
available indicate that between January and September this year government
failed to meet its revenue targets, as revenue and grants realised was GH¢17.7billion
-- falling short of the GH¢18.4 billion target.
Boosting
government’s revenue target now is even more untenable, as world market prices
of Ghana’s major export commodities have tumbled. While the world market price
of oil has dropped from US$115 in July to US$61 a barrel as of Monday, the
price of gold -- which is Ghana’s biggest export earner -- has also declined
from an average of US$1,238 per ounce in July to US$1,050. There’s also a
slowdown in economic activities and imports.
Meanwhile,
government is in line to meet the set target for gross international reserves
of not less than three months of import cover for goods and services. As of the
first week of November, the gross international reserves have improved to US$6.6billion:
equivalent to 3.8 months of import cover.
The
missed targets signify a lot of work for government to consolidate its fiscal
position and achieve the economic transformation Ghanaians cravea.
Mr.
Tekper presented the 2015 budget on the theme “Transformational Agenda: Securing the Bright Medium Term Prospects of
the Economy ’’, and as Christina Daseking -- the IMF’s team lead --
remarked earlier in the year in the Fund’s assessment of the Ghanaian economy: “The
success of the government’s ambitious transformation agenda is contingent on restoring
macroeconomic stability”.
source:B&FT
No comments:
Post a Comment