Economy Grew Slightly In 2014

Ghana's economy experienced a slight growth rate of 4.2 per cent in 2014, according to the revised Ghana Statistical Service (GSS) data released last Thursday.

Although the 4.2 per cent growth rate was lower than the 4.6 per cent projected in the 2015 budget, the real gross domestic product (GDP) corresponding to the revised rate was higher than what pertained to the earlier figure.

The Minister of Finance and Economic Planning, Mr Seth Terkper, who disclosed this when he took his turn at the Meet-the-Press series yesterday, said the government would take steps to rationalise expenditure, improve revenue mobilisation and implement structural measures in order to achieve set targets to achieve a growth rate of 3.9 per cent in 2015.

He said the commodity price index (CPI) recorded an annual inflation rate of 17.0 per cent in December 2014 and experienced a rate change of 1.0 per cent on a month-on-month basis.

He explained that factors including fuel and utility price adjustments and foreign exchange depreciation resulted in a non-food inflation rate of 23.9 per cent and a food inflation rate of 6.8 per cent during the period.

Impact of declining crude oil prices

As of Thursday, January 15, Brent crude price had fallen by more than 50 per cent to US$48.80.

However, according to Mr Terkper, as a result of the continuous decline in crude oil prices since September, 2014, the estimated Petroleum Benchmark revenue price of US$99.376 per barrel for 2015 may not be achieved, and this could have negative implications for execution of the 2015 budget.

He said the falling crude oil prices would have a mixed trade balance and may have negative implications for the current account and reserves.

“The required adjustments will be done through the necessary procedures to ensure that the continuous fall in the crude oil price does not derail our fiscal consolidation objectives,” he added.

Negotiations with the IMF

Touching on negotiations so far with the International Monetary Fund (IMF), Mr Terpker said that Ghana formally requested for policy and credit support from the IMF for a possible programme in August 2014.

He said since then the IMF had held three rounds of negotiations with the government, which had resulted in a consensus on the objectives of the programme.

Mr Terpker added that most of the measures required for the programme were consistent with the homegrown programme developed by the government, which were incorporated in the 2015 budget.

“A draft memorandum of economic and financial policies (MEFP) has been prepared and discussed with the fund. Further discussions on the MEFP will be held in the coming weeks before it is finalised for submission to the IMF executive board for approval,” he stated.

Wage negotiations, ghost names

He gave an assurance that negotiations for the 2015 minimum wage and 2015 base pay were ongoing between organised labour, employers and government, adding that the government was mindful of the expiration in December 2014 of the 10 per cent COLA which was granted to public servants for the 2014 fiscal year.

“Since the wage bill has been one of the sources of the fiscal slippages in recent years, government has since 2013 been implementing measures to control the wage bill and improve payroll management,” he said.

The Finance Minister said measures that had been introduced included an electronic salary payment voucher (ESPV) system and periodic payroll audit to reduce the incidence of ghost workers on government payroll and to streamline the payroll.

He also said a human resource management system (HRMS) was being developed to address HR management issues in the public service and related payroll issues, while a cabinet subcommittee had been established to oversee the implementation of payroll management in the country.

Answering questions by journalists after his presentation, Mr Terpker said as of October 2014, GH¢734,530 had been realised from the 10 per cent salary deductions of government appointees championed by President John Mahama.

He also said GH¢740 million had been paid into the District Assemblies Common Fund (DACF); GH¢49 million into the GETFund, and GH¢380 million arrears cleared, while the government was on course in the clearance of some pension arrears.

Mr Terkper also discounted rumours that the state’s stabilisation account, which was part of Bank of Ghana’s reserves, had been used by the government.

“If it has been cleared as is being rumoured, then the Bank of Ghana currently has no reserves because it is part of the Central Bank’s reserves,” he said.

He also said the fund currently stood at US$300 million and the Heritage Fund was about US$150 million.

Source: Daily Graphic