Finance Minister Seth Terkper on Monday failed to declare whether government deserved to be commended by Ghanaians for supervising the reduction of the country’s Gross Domestic Product (GDP) from 9.3 percent in 2012 to 3.9 percent in 2015.
Mr Terkper, who was briefing journalists in Accra on the country’s economic performance, blamed the situation on external market conditions and the prices of some major export commodities.
“What I am saying is that the economy is going through major transformation. It’s moving into a middle-income at the same time it is facing major setbacks. The very commodities that shifted us into that high gear, the prices slumped. I think we should plan. The thing is to find solutions to these.
“So 2001 to 2008 average real GDP was 5.6 percent (old series). Then you have 2009 to 2016 average GDP– 6.9 including oil. You see where the averages lie. If you pick one here, it tells one story. If you pick the average, you see it tells another story. I think it’s a matter of getting your sources right, getting the data right. Because that was why I said we are going through a lot of transitions. And it’s important that we have the context always very important.”
Pitching hope on Sankofa, Sinking Fund
Mr Terkper said actual assessment of the economy could begin after the Sankofa Oilfield comes on-stream.
“I believe that post Sankofa; we may see the economy take in, as the Energy Minister was saying 180,000 to 200,000 barrels per day or so and then that may be the level at which we will begin to assess the economy. But as we add and add incrementally, the figures may be playing a little bit of tricks, and I think that it’s important that we will have this fallback position.
The point I made was we have the fallback position, that’s the Sinking Fund. So we’ve been building that fallback position already which is illustrated. So the fall back position comes from what I have said – the combination of my bonds together with the World Bank money which I did not exhaust and the potential even with low crude oil prices to build the Sinking Fund further going to 2017 which is the only reason why we capped the Stabilization Fund. And we’ve rebalanced as it goes.”
Call for right strategies
The Finance Minister further said that “with the right strategies, we will definitely be matching into 2017 and 2018 confidently.”
He said, “In fact this is what many countries do. Philippines has a Sinking Fund which is so rich the fund can give money to government in times of need. When you have auction failures or uncovered auctions, that way you don’t have to pay higher price. You take your Sinking Fund to cover the auction. This is why we moved into zero financing in our history.”
Mr Terkper said as the country moved into zero financing, we realized that since the domestic markets have become liquid after the $ 1 billion, we did not spend the entire $1 billion last year.
“We spent just about $500 million, and carried the remaining $500 million as buffer as we go into zero financing. So that when we have uncovered auction, we are able to use the World Bank money which we should have used entirely for domestic to get into that policy to ride that policy. This is part of the debt management strategy.
“It is not just my idea but public servants who do a lot of deep research into what other countries do. And I must complement young employees who have gone to do their masters in finance in various fields and apply that knowledge. And the assistance of institutions like the World Bank. And another reason we must be going this way is because Ghana is not going to be getting cheap loans, because what TEN fields and Sankofa mean is that, we are consolidating our middle income country status. And you would not be getting cheap sources of financing like grants and concessional loans.”
By Samuel Boadi