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Ghana’s Economy Ahead of All   
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The Ghanaian economy has been described as a standalone in Africa, as it is solidly outperforming other economies on the continent. This year Gross Domestic Product (GDP) is expected to grow by 13.6 percent, the fastest in Africa, and experts say the economy is moving in the right direction.

The performance of the economy was brought into focus at Standard Chartered’s Africa Summit 2011 held in Accra on Thursday, which brought together key clients, industry/subject matter leaders, policymakers, regulators, media, and Standard Chartered global research and product experts to deliver valuable market insight, outlook and commentary.

The purpose of the event was to provide a platform to reiterate Standard Chartered’s expertise, commitment and capability in facilitating Africa’s growth; to encourage networking and interaction with clients and industry leaders; and to facilitate constructive discussion and knowledge-sharing between proactive and contributing members from Africa’s public and private sectors.

Ms. Razia Khan, Head of Africa Research, Standard Chartered, addressing the gathering said Ghana is still performing better and is closer to achieving the Millennium Development Goals than most African economies.

The decision to rebase the nation’s GDP was a good one, she said, and has provided a good basis for measuring the performance and size of the economy. The exercise boosted the GDP by two-thirds and lifted Ghana into the middle-income bracket of countries. She pointed out government has done well with its fiscal consolidation efforts as well as reducing the ratio of public debt to GDP from 60 percent before the rebasing of the GDP to about 40 percent now.

Expressing a common anxiety around this time, Ms. Khan said 2012 presents concerns to investors because it is an election year and could consequently lead to slippages due to the temptation to overspend to win votes.

“Investors need assurances that there will be fiscal discipline during next year to avoid slippages.” She explained that a key critical factor of the Ghanaian economy is the fact that its growth is broad-based in nature, which means apart from the oil sector, the non-oil sectors of the economy are growing. The service sector has been the main driver, now contributing more to output than the two other major sectors.

“The fact that in terms of export performance the non-oil sectors are doing well means Ghana is doing well to avoid the Dutch disease.” On managing the oil revenue, she said “Even though it is just almost a year since Ghana started producing oil, it has done well to ensure that it doesn’t become a curse.

“The setting-up of the Stabilisation and Heritage Funds as well as other initiatives show that Ghana is avoiding the situation where oil will become a curse.” Ms. Khan expressed some concern about tax-collection by the authorities, observing that more efforts must be directed to revenue collection even though tax receipts have gone up since January to date.

She said the revenue collection ratio to GDP has dropped from 23 percent before the rebasing of the GDP to 14 percent. On domestic financing, she said government must do more to encourage domestic financing, especially with the New Pension Act, so that it can create enough investible funds within the economy.

“Companies should be encouraged to issue corporate bonds, and also extend the yield curves.” The International Monetary Fund’s Resident Representative in Ghana, Mr. Wayne Mitchell, also praised the performance of the economy.

“For the first time in many years, Ghana looks set to meet all the targets set for it by the IMF.” Dr. Kwabena Duffour, Minister of Finance, said: “Ghana has a favourable outlook because our economy is on a growth trajectory and a sustainable path.”

He explained that sound monetary and fiscal policies have accounted for the good performance of the economy, adding that growth potential in the economy remains strong.
Source: B&FT

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