Ghana is expected to be the fastest growing economy in sub-Saharan Africa by 2019 with a growth rate of 8.8 percent. This was made known in the recently released World Economic Outlook report by the International Monetary Fund (IMF). This shows that Ghana will once again take the position of the rising star of Africa which it occupied in 2011. This comes after Ghana successfully completed its 16th Extended Credit Facility (ECF) programme of the IMF.
According to the report, the fiscal position (excluding financial sector-related costs) has continued to improve in 2018, despite persistent revenue collection challenges. The growth in the first three quarters of 2018 was due to oil production. The Inflation of the country has continued to decline to 9 percent in January 2019 within the Bank of Ghana’s inflation target symmetric band.
The Bank of Ghana also dissolved nine insolvent banks over a period of 18 months, in line with its commitment to clean up the banking sector and develop structural reforms to strengthen public financial management.
This means that Ghana’s macroeconomic performance has improved significantly in the last two years, however, the microeconomic indicators doesn’t show the same robust signs of growth.
Despite having a single inflation digit of 9 percent, the cost of living in Ghana is still on the high side, meaning that its citizens are suffering.
In order for the Ghanaian government to achieve this projected GDP growth of 8.8 percent and alleviate the suffering of its citizenry, it needs to look at these issues currently affecting its economy.
Erratic Power Supply
Currently, the economy is suffering from erratic power supply that is affecting a lot of businesses and households in the country. They have now resulted to spending money to buy petrol for their power generating sets in order to have light.
Dependence on importation
The country is also heavily dependent on import for almost everything, including meat and chicken. This dependence has affected the growth of the economy negatively and made the Ghanaian Cedis continually depreciate against all other major currencies. Although the Ghanaian Central Bank last week revealed that the Ghana cedi recovered to levels that appropriately reflected the state of the economy after “overshooting” during a slump in the first quarter.
Ghana needs to look at its government spending by providing the legislation that outlaws large deficits to the establishment of fiscal supervisory councils. This is because government spending has a ripple effect on businesses and jobs. The government also needs to prioritize its spendings such as spending on providing Chalks, desks, chairs and better infrastructure in schools for Ghanaian students rather than providing free school uniform.