Wednesday, 9 July 2014
Ghana budget review comes amid ailing economy
Embattled Finance Minister Seth Terkper is expected to outline new measures to address Ghana’s economy when he presents a mid-year review of the 2014 budget.
The review, which is likely to take place before the end of this month, could see the ministry modify its macroeconomic targets for the 2014 budget, which are widely seen as being unrealistic, as well as present new policies to stabilise the economy.
As reports emerged this week that the cedi could fall even further to between GH¢3.50 and GH¢4 per dollar, there is mounting pressure on President Mahama and his Finance Minister to deal with the country’s ailing economy.
Last week the Trades Union Congress released a statement reprimanding the government for an economic situation which is “getting worse every day” and a country in which “nothing is working”. It pointed to the continuous slide in the cedi, unpaid salaries, job losses, failing businesses, rising inflation, energy shortfalls, rising utility tariffs and high taxes as factors which continue to harm hardworking Ghanaians.
The Private Enterprise Foundation (PEF), an umbrella organisation for private businesses, also said last week that the government’s “misguided” policies mean that business confidence is at its lowest in four years. This echoed the sentiment of the Association of Ghana Industries which in May called for drastic measures to improve the dwindling fortunes of Ghanaian businesspeople, as well the concerns of the Monetary Policy Committee which, in its April report, spoke of a depressed business environment. There is also considerable anger that the government is not grasping the severity of the situation. The PEF’s CEO, Nana Osei-Bonsu, said, “Government comments like ‘we are going through short-term challenges and difficulties, and this is like a hiccup’ are not helping. These are hurricanes! This is not a hiccup.”
International ratings agencies have meanwhile delivered a damning report on Ghana’s economic management. Following Fitch’s downgrade of its outlook from stable to negative, Moody’s lowered Ghana’s rating to B2 from B1, and maintained a negative outlook on the rating to signal the likelihood of a further downgrade in future; it then downgraded the ratings for the GCB.
Despite increasing pressures, the government is sticking to “home-grown” solutions for now rather than seeking financial assistance from the International Monetary Fund to help solve its problems.
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