Economy on recovery path

Mr Ofori Atta presenting the budget statement to Parliament

Mr Ofori Atta presenting the budget statement to Parliament

Ghana’s economy is on the path of recovery and investor confidence has been restored, the Minister of Finance, Ken Ofori-Atta has said.

“Inflation is trending downward and interest rates are lower, the cedi has stabilised, and there is a general feeling of optimism and hope,” he said  this in Parliament in Accra yesterday when he presented the Mid-Year Fiscal Policy Review of the 2017 Budget and Economic Policy.

This is in line with Section 28 of the Public Financial Management Act, 2016 (Act 921) which enjoins the Minister of Finance to every year  present half-year review of the Budget Statement and Economic Policy to Parliament.

According to him, though the government inherited a weak economy characterised by huge debt and high fiscal deficit, it had worked within the last six months to improve on them, adding that government was achieving the targets it set out in the 2017 Budget Statement and Economic Policy.

He said the economy has returned to the path of growth and stability following the abolishment of more than 12 nuisance taxes, which were hindering the growth of the private sector, namely the One per cent special Import Levy imposed on imported raw materials and machinery, five per cent Value Added flat rate imposed on the Real Estate and the 17.5 per cent VAT on Financial Services.

He said the prudent economic policies; improved fiscal discipline and competent management of the economy, “the macro-indicators for the first half of the year are pointing in the right direction.”

The Minister opined that developments from January to June 2017 indicate that the President’s policies and programmes were yielding the expected results, and in some case, exceeding expectations.

“Typical of the strengthening performance is the fact that for the first six months of the new Akufo-Addo government, both the fiscal deficit and primary balance outperformed their targets.  The exchange rate is stabilising, inflationary pressures have eased and interest rates are trending downwards,” he said.

The Minister said progressively, confidence was being restored in the economy and government was confident that “this positive trend will be sustained in the months and years ahead.”

He stated that primary surplus for January-June, 2017 recorded a surplus of 0.6 against a target of 0.01 per cent, compared to a deficit of 1.3 per cent over the same period in 2016, and said this “is an indication that our fiscal effort is on track.”

In addition, the minister said the Gross International Reserves at the end of June stood at $5.9 billion, the equivalent of   3.4 months of import cover, up from $4.9 billion at the end of December 2016, equivalent to 2.8 months import cover.

“Gross Domestic Product (GDP) for the first quarter of 2017 grew by 6.6 per cent against 4.4 per cent for the same period in 2016, inflation reduced to 12.1 per cent at the end of June 2017, from 15.4 per cent at the end of December 2016,” he said.

Mr Ofori-Atta said interest rate continues to decline and the 91-day Treasury bill rates had reduced from 16.4 per cent at the end of 2016 to 12.08 per cent at the end of June, 2017 and the fiscal deficit as a percentage of GDP for the period January-June 2017 was 2.7 per cent compared with a deficit of 4.0 per cent over the same period in 2016.

“These indicators clearly show that the economy is on the path of recovery and investor confidence has been restored,” he said.

However, the Minister said the revenue target of government was not met and efforts were being made to improve revenue in the second quarter of the year.

Total revenue and grants amounted to GH¢17.5 billion (8.6 per cent of GDP), against a target of GH¢20.5 billion (10.1 per cent of GDP).

By Kingsley Asare & Julius Yao Petetsi

 

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