Fiscal Alert 15: The 2018 Fiscal Policy Objectives and Targets: What has changed?

Ghana has been facing fiscal difficulties since 2012 and the effects were at the forefront of the fiscal challenges that confronted the NPP government that came into office in 2017. For most of the past six years, large persistent fiscal deficits and a rising debt burden have posed an increasingly serious policy challenge for the country.

The implementation of the single spine salary structure for the public sector in 2010, coupled with a sharp rise in energy-subsidy costs and fiscal transfers, rapidly increased public spending. Consequently, the fiscal deficit rose from 4% of GDP in 2011 to 11.6% in 2012, coupled with a rapid accumulation of government payment arrears. The emergence of a large fiscal deficit and external imbalances led to a slowdown in growth, putting the country’s medium-term prospects at risk.

Government’s efforts to achieve fiscal consolidation since mid-2013 were undermined by policy slippages, external shocks, and rising interest cost. As a result, the fiscal deficit remained far elevated and above its target levels, reaching 10.7% of GDP in 2013 and 10.1% in 2014 (World Bank, 2017).

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November 19, 2018

The 2018 Fiscal Policy Objectives and Targets: What has changed?

Fiscal Alert 15: The 2018 Fiscal Policy Objectives and Targets: What has changed?

Ghana has been facing fiscal difficulties since 2012 and the effects were at the forefront of the fiscal challenges that confronted the NPP government that came into office in 2017. For most of the past six years, large persistent fiscal deficits and a rising debt burden have posed an increasingly serious policy challenge for the country. The implementation of the single spine salary structure for the public sector in 2010, coupled with a sharp rise in energy-subsidy costs and fiscal transfers, rapidly increased public spending. Consequently, the fiscal deficit rose from 4% of GDP in 2011 to 11.6% in 2012, coupled with a rapid accumulation of government payment arrears. The emergence of a large fiscal deficit and external imbalances led to a slowdown in growth, putting the country’s medium-term prospects at risk. Government’s efforts to achieve fiscal consolidation since mid-2013 were undermined by policy slippages, external shocks, and rising interest cost. As a result, the fiscal deficit remained far elevated and above its target levels, reaching 10.7% of GDP in 2013 and 10.1% in 2014 (World Bank, 2017).
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November 15, 2018

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[Occasional Paper 18] Ensuring Strong Broad-Based Economic Growth and Significant Reduction in Unemployment in Ghana

Having witnessed a decline in economic growth in the 1990s on average, Ghana recorded increased rates of economic growth in the 2000s. In 2011 and 2012, the economy of Ghana registered exceptionally high growth rates.

Even though this was partly due to the production of oil in commercial quantities, which began in December 2012, the traditional non-oil sector also saw very high growth rates in these years. However, starting from 2013, the growth of both the total and non-oil economies began to decline, reaching incredibly low rates from 2014 to 2016. In 2017, the economy appeared to have turned around, as it registered a strong growth rate. Nevertheless, the high growth rate in 2017 was induced by the oil sector because of the coming on stream of the Tweneboa Enyenra Ntomme (TEN) and Sankofa Gye Nyame oil fields.

The traditional non-oil sector continued to register low growth in 2017. As a consequence, unemployment, particularly among the youth, is soaring. To address this dangerous socioeconomic problem, strong broad-based economic growth is critically needed. Although the present government is pursuing a number of policy programmes to ensure broad-based economic growth, the weak and fragile fiscal position in which the country currently finds itself call for extreme care in policy formulation and implementation.

After conducting a thorough analysis of the government’s policy programmes, and based on clear analytical evidence, this paper provides recommendations to help the government fine-tune its policies so as to ensure policy effectiveness and the avoidance of complications.

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November 9, 2018

Press Release: IFS Ghana’s Expectations on the 2019 Budget

Press Release: IFS Ghana's Expectations on the 2019 Budget

The Minister of Finance, Hon Ken Ofori-Atta is expected to present the 2019 National Budget Statement to Parliament next week.

In this regard, the IFS Ghana held a press conference on Thursday, November 8, 2018, to present the institution's expectations of the budget, given the current state of the economy.

The press conference was in two parts:
The first part covered the main theme of Economic Growth and Unemployment, delivered by Dr. Said Boakye, Senior Fellow, IFS Ghana. Download the presentation here

The second part of the press conference covered Revenue and Expenditure Issues; Borrowing and Debt; Financing Infrastructure; and Financial Sector Developments, presented by Dr. John Kwakye, Research Director, IFS Ghana Read release here 

 
October 28, 2018

Strong Economic Growth And Significant Reduction In Unemployment: The Critical Issues To Address In Ghana’s 2019 Budget [Occasional Paper 17]

 [Occasional Paper 17] Strong Economic Growth And Significant Reduction In Unemployment: The Critical Issues To Address In Ghana’s 2019 Budget

Unemployment has become the most serious challenge currently confronting Ghana. Indeed, the unemployment problem has reached a crisis point, given that the rate consistently increased over the most part of the last three decades, and stood at 11.9% at the end of 2015. The overwhelming majority of the unemployed are young people, aged between 15 and 34 years. Only 10% of graduates find jobs after their national service, and available statistics show that sometimes it takes up to 10 years for a large number of graduates to secure employment. Majority of the employed are in the private sector, of which about 90% are in the informal sector. The informal sector is known for its low productivity and very low incomes. The failure of Ghana’s economy to grow at appreciable rates in order to create jobs and improve incomes and livelihoods of Ghanaians has become a major concern.  
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