PPresident Nana Addo Dankwa Akufo-Addo yesterday told Parliament that, despite the few challenges, the general condition of the country “is in good health”
He touted the impressive macro-economic records of his government, which has made Ghana the leading recipient of foreign direct investment in West Africa, amidst cheers from the majority side of the House.
The President was delivering this year’s State of the Nation address at Parliament House in Accra.
“Mr Speaker, production in the economy, as measured by real Gross Domestic Product (GDP) growth, has picked up very strongly in the last two years, from 3.4 per cent in 2016, real GDP growth increased to 8.1per cent in 2017.
“In 2018, provisional data for the first three quarters indicates a strong real GDP growth of 6.0 per cent, higher than the annual target of 5.6 per cent. Real GDP growth for 2019 is forecast at 7.6 per cent,” he said.
Ghana’s recent GDP growth, the President said, had placed the country among the fastest growing economies in the world and noted that the fiscal deficit was being brought down from the 7.3 per cent of rebased GDP in 2016 to a provisional 3.9 per cent of GDP at the end of 2018.
The debt-to-GDP ratio, he added, had declined from the 56.6 per cent of GDP in 2016 to 54.8 per cent at the end of 2018.
President Akufo-Addo made reference to the announced by the Ghana Statistical Service last week, that inflation had dropped from 15.4 per cent, at the end of 2016, to 9 per cent in January this year, the lowest in six years.
“Interest rates are declining, and so is the Bank of Ghana Monetary Policy Rate. Our trade balance account, for the first time in more than a decade, recorded a surplus in 2017, and is expected to remain in surplus.
“In May 2018, a US$2 billion Eurobond was issued for 30 and 10 years of US$1 billion each with coupon rates of 8.627 per cent and 7.625 per cent respectively, and these were the lowest rate and the longest maturity in our history, signifying confidence in the economy,” he said
President Akufo-Addo reiterated plans by his administration to institute a legal framework to help with the discipline in managing the economy, and added that the Fiscal Responsibility Law, Act 982, capping the deficit at 5.0 per cent by law, would help sustain the discipline.
“I inaugurated the Presidential Fiscal Responsibility Advisory Council, chaired by the eminent, respected economist, Dr Paul Acquah, former Governor of the Bank of Ghana and former Deputy Director of the Africa Department of the IMF, with some of the finest and most reputable economists of our country as members.”
“Its purpose is to advise the President on relevant, additional measures needed to maintain fiscal discipline”
“We have done this because we know the temptation to go on a spending binge will always be there, we know election years will come around and there will be pressure on government to splurge, and persuasive arguments will be made that you have to stay in government to be able to implement your programmes,” he said.
President Akufo-Addo said his commitment was to run a responsible administration, mindful of the next generation, and not, merely, the next election.
However, he said revenue mobilisation had posed the biggest challenge in the management of the economy, with the tax exemption policy in particular proving to be a growing menace to fiscal stability and revenue generation.
“In the last eight years, tax exemptions in respect of import duty, import VAT, import NHIL and domestic VAT had grown from GH¢392 million, representing 0.6 per cent of GDP in 2010, to GH¢4.66 billion, representing 1.6 per cent of GDP in 2018,” he said.
He indicated that the figures did not include exemptions from the payment of corporate and individual income taxes, concessions on tax rates, petroleum tax reliefs, customs tax exemptions enjoyed by diplomatic missions and waiver of processing charges at the ports.
“If we continue at this rate, in less than 16 years, half of Ghana’s revenue base will be given away as tax exemptions. Mr Speaker, this is not sustainable and we intend to do something about it to reverse the trend, by introducing suitable measures that may disrupt the easy and comfortable arrangements that many have become accustomed to, but which we have to take to ensure that we have the firmest of foundations for the economic take-off that has escaped us for so long,” he said.
By Yaw Kyei and Julius Yao Petetsi