Business News of Wednesday, 21 January 2015
Ghana lost $1.5 billion in export revenue last year as a result of falls in prices of primary commodities on the world market, President John Mahama has revealed to Ghanaians in Germany.
Citing that as one of the major factors frustrating the Ghanaian economy, President Mahama said Tuesday in Germany that such fluctuations makes it imperative for the country to start adding value to its primary commodities for export.
The prices of cocoa, gold and other minerals suffered a fall on the world market last year.
Crude oil is also following suit this year. It is currently at a record low of $48 per barrel. Ghana started oil production in 2011.
Making reference to the sharp fall in the price of crude oil on the world market, which he said will result in the country losing an estimated $500 million, President Mahama said: “That’s the problem when your economy is based on primary commodity exports and that’s why we need to add value to our economy by ensuring that we add value to some of the primary products that we export.”
Explaining other reasons which contributed to the economic crisis, President Mahama said as a result of the implementation of the new Single Spine Salary Structure (SSSS), Government incurred some overruns.
“We went from a wage bill of just about 3.2 billion to a wage bill of about 8 billion, so as of 2012, about 70 percent of tax revenue was being consumed by wages,” which he said “suffocated” the economy.
He said compounding the problem was the downgrading of the country’s economy by Fitch and Moodys, which reduced confidence in the Ghanaian economy, necessitating the need to go to the International Monetary Fund (IMF) for a three-year programme to add policy credibility to the country’s homegrown policies meant to deal with the crisis.
“Since we did that the economy has stabilised…it is our hope that once we sign onto the programme, it will bring on the kind of fiscal discipline that we need to be able to move the economy forward,” the President added.