Ghana’s economy increased from 3.7% in 2016 to an estimated 7.9% in 2017, Vice President, Dr Mahamudu Bawumia, has stated.
According to the Vice President, this is the best annual real GDP growth for the first year of any new government since 1992.
Speaking at the opening of the 69th annual New Year School and Conference in Accra, Vice President Bawumia said the future looks bright, despite inheriting a gloomy economy.
“At the end of 2016: Real GDP growth was down to 3.7% in 2016 from 9.1% in 2008, declining growth in agriculture and industry, rising Unemployment, High Fiscal Deficits, Rising Public Debts, High interest rates, Accumulating Arrears on government obligations – The arrears validated as outstanding at the end of 2016 was GH¢3.1 billion, Weakening of the Banking system, Cancellation of teacher and nursing training allowances, Return to cash and Carry under NHIS, freeze on the hiring of Extension Officers in agriculture, High and pervasive taxes, and Corruption,” he outlined.
Against this background, the Vice President said, the President and the NPP government fulfilled key campaign promises such as the launch of the flagship Free SHS education programme, lowering of taxes, restoration of teacher and nursing training allowances, NHIS resuscitation, and creating jobs among others.
“At the same time the government committed in the 2017 budget to reduce the fiscal deficit from 9.3% to 6.3% of GDP,” he stated.
Dr Bawumia acknowledged the challenges the NPP government faced in its first year including revenue generation challenges, however, it has proven its critics wrong. “This was a challenge to the government,” he said.
Vice president Bawumia outlined a litany of achievements under the Akufo-Addo administration after a year in office:
- Economic growth has increased from 3.7% in 2016 to an estimated 7.9% in 2017. This is the best annual real GDP growth for the first year of any new government since 1992.
- Agriculture growth increased from 3.0% in 2016 to a projected 4.3% in 2017.
- Industry growth increased from -0.5% in 2016 to 17.7% at the end of 2017 underpinned by increased petroleum production
- The services sector growth is projected to decline from 5.7% in 2016 to 4.7% in 2017
- Non-Oil GDP growth is projected to marginally decline from 4.9% in 2016 to 4.8% in 2017.
- Inflation declined from 15.4% in 2016 to 11.8% in 2017
- Interest rates on the 91-day treasury bills declined from 16.8% in 2016 to 13.3% in December 2017.
- The Bank of Ghana Monetary Policy Rate saw a year-on-year reduction from 25.5 percent by end-2016 to 20 percent by end-2017. This is the largest single year reduction in the monetary policy rate since 2001and since the onset of the Bank of Ghana’s inflation targeting regime.
- Ghana’s external payments position has strengthened. The trade account recorded a surplus of $646 million (1.4% of GDP) ast at September 2017 compared to a deficit of $2.0 billion (4.7% of GDP) for the same period in 2016.
- Our gross international reserves increased from $6.2 billion in December 2016 (3.5 months of imports) to $7.4 billion as at 24th November 2017 (4.1 months of imports)
- The exchange rate of the cedi to the US dollar depreciated by 4.6% in 2017, the same rate as in 2016.
- Ghana’s sovereign credit rating has improved with Fitch ratings changing Ghana’s B rating outlook from “Negative” to “Stable” while S&P changed Ghana’s outlook from Stable to Positive.
- The primary balance also posted a surplus for 2017 compared to the deficit recorded in 2017.
- Ghana’s debt to GDP ratio declined for the first time since 2007 from 73% of GDP in 2016 to some 70% in 2017.
- The rate of accumulation of Ghana’s debt stock has also declined significantly. The annual average rate of debt accumulation of 36% over the last four years declined to 13.58% in the first four months of 2017.
- Fiscal discipline has been restored and fiscal consolidation has taken hold. For the first time since 2006, the government of Ghana has been able to meet its fiscal deficit target notwithstanding some revenue shortfalls. The fiscal deficit target was to reduce the deficit from 9.3% of GDP in 2016 to 6.3% of GDP for 2017. The preliminary data for end December 2017 indicates that the fiscal deficit was some 5.6% of GDP in 2017. Many doubted the ability of government to achieve the target in light of revenue challenges.
- The question that we should ask is how can you inherit a budget deficit of 9.3% of GDP, proceed to reduce taxes, bring down inflation, bring down interest rates, increase economic growth, increase your international reserves, maintain relative exchange rate stability, reduce the debt to GDP ratio and the rate of debt accumulation, pay almost half of arrears inherited, stay current on obligations to statutory funds, restore teacher and nursing training allowances, double the capitation grant, implement free senior high school education and yet still be able to reduce the fiscal deficit from 9.3% to an estimated 5.6% of GDP? Quite simple, this is a remarkable achievement and this is what we mean by competent economic management.
Dr. Bawumia gave the assurance that 2018 will be far better judging from what government was able to achieve in its first year.
The New Year School is under the aegis of the School of Continuing and Distance Education under the College of Education. The 69th Annual New Year School and Conference is under the theme: “Job Creation for Accelerated National Development: The Role of the Private Sector” from Monday, 15th January 2018 to Friday 19th January 2018.