Economy set for take-off

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The Minister of Finance and Economic Planning, Dr Kwabena Duffour, has given a brighter outlook of the country’s economy for 2010 and declared that with the stabilisation of the economy, the government is now set to transform the rural economy.

Sharing his perspectives on the economy with the Daily Graphic, Dr Duffuor explained that substantial investments in agriculture, as well as the development, improvement and maintenance of infrastructure, would be the driving force behind the transformation of the rural economy.

“The Government’s priority is to promote sustained economic growth through empowering and transforming the rural economy. The government will, thus, in this year, undertake substantial investments in agriculture, infrastructure, maintenance, improvement and development in accordance with our strategic plans and other strategies,” he stated.

He said empowering and transforming the rural economy would not only ensure a sustained growth, but it would also help a balanced growth in the economy to enable the private sector to take advantage to invest in any part of the country. Dr Duffour said the government was committed to supporting the private sector as a key partner in contributing to the development aspirations of the country by creating jobs, higher incomes and improving the standard of living of the people.

He, therefore, called on the sector to invest in the economy on the back of the significant stabilisation successes chalked up in spite of the global economic meltdown so as to help build a better Ghana.

“Potential investors should take advantage of the dramatic changes in the macroeconomic conditions and the successes chalked up in the Ghanaian economy to invest in the country to help build a better Ghana,” Dr Duffour stated.

The 2010 budget clearly has provision for supporting a wide range of agricultural activities, including the Youth in Agriculture (YIA) policy that is a cardinal employment-creating vehicle.

The Savannah Accelerated Development Authority (SADA) would also take off this year to be coupled with some private initiatives such as the $25 million Alliance for Green Africa (AGRA), an agricultural support initiative of the Standard Bank, the parent company of Stanbic Bank, Ghana. The Finance and Economic Planning Minister said the government was upbeat about the future prospects of the country and that priorities would be met, saying the government had demonstrated its commitment to solving the problems confronting the country by instituting prudent economic measures that stabilised the economy in the last 12 months in the light of the global crisis.

Dr Duffour said the past year had seen the government make difficult decisions aimed at laying a solid foundation for economic take-off in 2010 amidst an opportunity to further worsen the situation, adding that the wide range of comprehensive and well-sequenced reforms enabled the achievement of resounding results in 2009. He said some of the achievements included the lowering of inflation from the high of 20.6 per cent in April, 2009 to 16.97 per cent in November, 2009 and said the “challenge is to anchor inflation at this pace through the end of the year and beyond.”

The exchange rate also stabilised leading to the cedi appreciating against the dollar of the latter part of the year. The cedi, which traded at GH¢1.22 to a dollar in December 2008, depreciated sharply to GH¢1.49 to the dollar by the end of July 2009.

However, the measures put in place helped to arrest the situation, giving way to the cedi to appropriate in magnitudes unprecedented in the country’s history. By the end of July, the cedis traded at an average of GH¢1.49 to $1.00; GH¢1.45 to $1.00 in August and GH¢1.45 and GH¢1.44 to $1.00 in September and October respectively.

Consequently, the government would continue to implement appropriate monetary and fiscal policies and maintain a relatively stable exchange rate so as to spur production levels in the economy as a measure to make the economy remain stable and robust.

“Indeed, a reduction in the pace of economic activity, more prudent fiscal policy, continued monetary restraint, and declining world oil and food prices are all expected to lead to a fall in inflation in 2010,” Dr Duffour said, projecting that those would lead to the attainment of a single digit inflation by the end of 2010. He said, however, that a sustained fiscal consolidation would require continued overhaul of public expenditure management, improved efficiency and cost cutting.

“Inevitably, a substantial part of the adjustment will need to be accomplished through higher revenues. To this end, the government will continue to broaden the tax base and improve tax administration,” Dr Duffour stated.

In the medium term, the minister said, the government would invest in removing constraints on the transport, communications and energy sectors and therefore pave the way for broad-based poverty reduction.

During 2010, the government would also engage Vodafone and seek to put obligations on their use of the Ghana Telecom national fibre-optic backbone “in an attempt to strike advantageous deals for Ghana.” That is because information and communications technology (ICT) is an integral part of any poverty-alleviating tool under the country’s development agenda, the Growth and Poverty Reduction Strategy II, which means that the national fibre-optic asset should be in the hands of Ghanaians.

The government would also secure greater involvement in the country’s oil field through its agent, the Ghana National petroleum Corporation (GNPC). Dr Duffuor also expressed the hope that investor confidence would be boosted in the economy this year as structural reforms would improve their competitiveness, which would translate into an overall economic outturn for 2010. The Finance and Economic Planning Minister reiterated his belief that the government would do away with deficits by 2012 and replace them with growing surplus, especially as the third-quarter would witness the production of crude oil in commercial quantities.

Currently, partners in the Jubilee Oil field, including Kosmos, Tullow and GNPC, are building the Floating Production, Storage and Offloading vessel, which would be used to produce oil in the last quarter of the year.

Source: Daily Graphic