World Bank underpins stronger growth ...sees agric boost reducing imports
Aside improved commodity prices, the World Bank sees government’s ‘Planting for Food and Jobs’ programme reducing food imports, saying growth could rebound from last year’s low level to up to 7percent.
A 7percent growth would be 0.7percent higher than the government’s own projection, and would double last year’s growth rate.
Last year’s less than impressive 3.5 percent growth rate, against a 5.4 percent projection, was attributed largely to erratic power supply, high inflation, high taxes, exchange rate volatility, and high cost of credit, among others, that crippled businesses.
The new government has announced a number of measures to deal with these macroeconomic challenges, and if commodity prices rally as expected, the World Bank believes the country should be on the path of recovery.
“So, with a combination of these factors, we are confident that growth will rebound from last year’s very low growth level to between 6-7percent set for 2017,” Henry Kerali, the bank’s Country Director for Ghana, Liberia and Sierra Leone, told the B&FT.
Commenting on the country’s high fiscal deficit, which rose to 8.7 percent against a target of 5.3 percent of GDP last year, Mr Kerali said government must remain committed to the IMF programme and also pursue strategies that will increase revenue collection, and at the same time keep its expenditure under control.
“The government has already taken a number of measures. First and foremost, is the IMF programme that defines the annual fiscal targets that the government aims to achieve, which is to reduce the annual deficit levels.
In so doing, government will have to increase its revenue performance quite significantly, but at the same time, government needs to control its expenditures so that at the end of the day, it is able to meet its fiscal deficit target,” he said.
“In addition to that, government must be very proactive in managing the current debt stock. Current interest payment on existing debt is quite high, so if government can find ways to reprofile, reschedule some of its debts, or even pay off some of these debts and substitute with much lower interest then this is something we will recommend,” he added.
Finance Minister, Ken Ofori-Atta, has said, already, that government will adhere to and maintain good economic governance principles of fiscal discipline and accountability which will see the deficit reduce to 6.5 percent of GDP.
Will agric revival change the game?
The government has said its agricultural sector revival programme will create some 750,000 jobs and inject some GH¢1.4billion to the rural economy in the second year.
The country has been importing a lot of food as figures from the statistical service show. Between calendar year 2007 and 2015, the total value of imports of eight major food items – rice, sugar, poultry, cooking oil, vegetables, fish, salt and wheat – moved from US$470 Million to approximately US$2 billion.
During the same period, the total volume together escalated from 882,000 metric tonnes to a peak of 1,223,000 metric tonnes in 2013 with slight dips in 2014 and 2015.
According to Agric Minister, Dr Owusu Afriyie Akoto, “the 2015 import bill of US$2.1 billion for the eight food items is equivalent to the total foreign exchange earnings from our major export cocoa in 2014/15.
Looking at it from another perspective, it is more than the US$2 billion cocoa syndicated loan approved by Parliament in June 2016 for the purchase of the coming 2016/17 cocoa crop.”
Agric sector performance
Annual agricultural growth rates have steadily declined from 7.4 per cent in 2008 to 7.2 per cent in 2009, 5.3 per cent in 2010, and 0.8 per cent in 2011.
Growth recovered somewhat to 2.3 per cent in 2012, 5.4 per cent in 2013 and 5.3 per cent in 2014, before dipping 2.4 per cent in 2015 and then up to 3percent in 2016.