Director of the Institute of Statistical Social and Economic Research (ISSER) at the University of Ghana, Professor Peter Quartey, has urged government to develop resilient systems and policies to absorb some of the economic shocks that are posing difficulties in the country.
He said though the economy will continue to face challenging times for a while, there are prospects ahead depending on how well and smartly government tackles its domestic policies.
“We are in challenging times. However, we have to fashion-out resilient systems and policies to absorb some of the shocks. Unfortunately, our economy remains fragile; and therefore we have not been able to accommodate shocks from the global happenings which affect us very well.
“In the coming months, we will continue to face some of these challenges; but if we are smart enough to do the necessary investments, we will be able to minimise some of these effects,” he said in an interview with B&FT.
Currently, the country’s inflation rate stands at 31.7 percent and the cedi has recorded a 28.82 percent depreciation to the dollar as of August 8, 2022. Also, some international agencies including Fitch and Standard and Poor’s (S&P) have downgraded the country – citing deterioration in public finances and a negative outlook.
In light of these factors, Prof. Quartey is confident that taking pragmatic measures to invest in agriculture and promote local production and consumption will put the country a step ahead in absorbing the shocks.
“Food inflation is a bigger problem. If we are able to at least tackle agriculture production, we will minimise food inflation; and this we can easily do. Also, government must invest in irrigation and other aspects of the value chain. Once we enhance agricultural production, we have solved part of the problem. Agric is very eminent.
Then, we look at the fiscal measures – raising more revenue to finance our expenditures without having to resort to borrowing every time. Also, getting selected industries to guarantee credit for them. There are some high volumes of imports and support to certain foreign companies, I think we should extend similar measures to local producers. Let us do whatever we can to promote local production,” he said.
He added that it is also essential to make conscious efforts to promote the consumption of made-in-Ghana products and reduce over-reliance on imported goods to minimise pressure on the exchange rate.
“We cannot rely too much on imported products. Everybody is importing to sell, and that is putting so much pressure on the exchange rate. I believe we should make some conscious efforts to promote made-in-Ghana goods. We must encourage and consider home-grown products to minimise the effects on the exchange rate, and when this happens jobs will be created for local folks,” he said.
Downgrades are expected
Though government expressed its disappointment with Standard and Poor’s (S&P’s) decision to downgrade Ghana despite the bold policies implemented in 2022 to address macro-fiscal challenges and debt sustainability, which have been significantly exacerbated by the impact of global external shocks on the economy, Prof. Quartey said it is expected as outcomes of the policies are what matters.
“It is to be expected. The rating agencies look at what measures you are putting in place and what results you are getting from those measures. So, it is not just the policies you put in place but whether they are yielding the necessary results. For instance, we saw introduction of the e-levy, and how much we are raising from it. Government has put in place policies, but they are not yielding the needed results as expected,” he noted.