The Minister of Finance, Seth Tekper has revealed that the economy is beginning to show signs of recovery from the current challenges.
He expressed optimism that the nation will rise again despite the challenging period is it facing in recent times.
“As a nation we have risen above many challenges before, and we shall rise again. Indeed, the signs of recovery are already beginning to show,” he said.
Presenting the mid-year review, revised budget and the macroeconomic targets for 2014, the sector Minister told Parliament that the President, John Mahama is committed, focused and determined to lead the country “out of our current temporal economic challenges.”
According to him, the government is appreciative of the “sacrifices, fortitude, and support of the people of Ghana” through these hardships.
The Finance Minister in accordance with Article 179(8) of the 1992 Constitution is mandated to present to Parliament, a mid-year review, revised budget and macroeconomic targets for the year.
Mr Tekper recalled that since 2006/2007, the nation has faced difficulties and subsequently “opted for debt relief under the HIPC Initiative, which gave us significant borrowing space to accelerate our development.”
“In 2010 when we rebased our GDP, we became a Lower Middle Income Country (LMIC) with some pride but also with serious implications. Then in 2011 when we started to export crude oil, our LMIC status got consolidated.”
He disclosed that the World Bank has changed Ghana’s status by “moving us from softer loan terms (that is, 10-year grace period, with 30-year repayment) to stricter terms (that is, 5-year grace period and 20-year repayment).”
The World Bank has again started the process of upgrading Ghana to a “blend” status, “which will make us eligible to access the resources of both the International Development Agency (IDA) and International Bank for Reconstruction and Development (IBRD) at the same time.” Mr. Tekper noted that these developments have limited Ghana’s options to access “concessional loans and grants from development partners.”
He admitted that since March 2013, when the 2013 budget was presented and approved by Parliament, the economy has experienced a number of pressures, which is posing challenges to the attainment of the 2014 economic targets.
He mentioned the continuing shortfalls in tax and non-tax revenues, the consequential depreciation of the Cedi, which is having significant adverse effects on economic activity and the declining gold and cocoa prices in 2013 which continue to have a lingering effect on the economy.
According to him, the factors which disrupted power production and output have also resulted in the nation’s reliance on higher imports of crude oil for thermal power generation.
“These factors have adversely affected the nation’s growth and output, domestic revenue mobilization effort, as well as balance of payments and reserves position. In addition, they have considerably undermined the implementation of policy decisions, such as the automatic utility price adjustments, thereby, giving rise to the payment of higher subsidies,” he explained.
The sector Minister served notice that going forward, government has learnt very important lessons from the current economic difficulties such as “the need to further sharpen and enhance our economic management systems so that we can better manage volatilities such as disruptions in power supply and commodity price shocks.”
“We must also improve on various proposals that are emerging and which we are implementing to manage our transition to LMIC status. Furthermore we must endeavour to address the risks posed by events in the global environment, including the difficulty with which the global economy continues to emerge from the worldwide financial and economic crisis,” he added.
By: Efua Idan Osam/citifmonline.com/Ghana