The private sector requires sustained credit over time to stimulate economic growth and development, Dr. Eric Osei-Assibey – an economist and a Senior Research Fellow at the Institute of Economic Affairs, has suggested.
Non-oil real GDP is projected to grow at 6.2 percent for 2019, while the overall real GDP is expected to grow at an average of 7.6 percent, according to the 2019 Budget Statement and Economic Policy.
It is in the light of this that Dr. Osei-Assibey reckons the economy will be driven largely by the private sector.
“They [private sector] will need to have access to credit, because the credit growth has been very sluggish in recent times. So, if this is going to happen, we will have to make sure that the pace at which the lending rate is coming down should quicken up,” he told the B&FT at the 2019 post-budget workshop at Koforidua in the Eastern Region.
According to the World Bank Group 2019 Doing Business Report released earlier this month, Ghana made progress to improve the ease of doing business.
In the latest report, Ghana improved its ranking to 114 out of 190 economies – up six places from 120 in the 2018 Doing Business Report.
Furthermore, he indicated that government will have to make good its promise of investing heavily in infrastructure that will create a competitive environment for the private sector to be able to invest: “so, if the infrastructure is absent, definitely it is going to affect growth”.
Maximising domestic resource mobilisation and increasing tax revenue to GDP ratio levels in line with peer lower middle-income countries remains government’s target.
It intends to attain this objective by intensifying tax compliance, expanding the tax base and streamlining tax exemption through deepening digitisation [port automation, TIN, use of fiscal electronic devices, national ID card system, National Digital address system].
Ghana will be exiting the US$918million credit deal with the IMF signed in April 2015 to fix its economy, dogged by high deficits, inflation and a distressing public debt.
The move, even though it has been welcomed by Dr. Osei-Assibey, expects government to strengthen public financial management and expenditure controls, thereby boosting the country’s reserves.
He also commended government for committing to setting-up the Fiscal Council as well as the Fiscal Responsibility Act, to “take over where IMF left off” so as to be able to whip government in line to ensure fiscal discipline.
“It is not enough to announce the Fiscal Council; you have to ensure it is well-resourced, that it has the needed human capital and enough support and commitment on the part of government. Adherence to these rules is key in ensuring that this Fiscal Council becomes sustainable,” he said.
Government’s focus areas in the economic sector include: a strong and resilient economy; sustainable and reliable energy; industrial transformation; science, technology and innovation; private sector development; agriculture and rural development; fisheries and aquaculture; and tourism and creative arts development.