Despite being criticized by the Institute of Economic Affairs (IEA) and other think-tanks in Ghana over the government’s 2014 targets, the Minister of Finance, Seth Terkper said the government will meet all the targets by the close of the year 2014.
The government forecast a growth rate of 8.5% for the year 2014, which is 0.5 points above this year’s 9%. The forecast for budget fiscal deficit is 8.5%, while the forecast for inflation is 9.5 plus or minus 2%. The country’s inflation currently stands at a record high of 13.1%, the highest in three years.
Mr. Terkper told participants at the well-attended Citi FM Roundtable Series’ budget session that the government would work hard to ensure the 2014 forecasts were realised.
Moreover, he also disagreed with critics that these goals were not ambitious. Speaking at the same event, Senior Economist at the IEA, Dr. John Kwakye, however, said that the government’s 2014 budgetary goal for non-oil growth would not be attained.
Kwakye said: “With oil output set to increase, the oil-inclusive growth of 8.5% seems to compare favourably with the 7.4% achieved this year (2012). The oil-exclusive target of 7.4% (compared with 5.8% in 2013), however, looks ambitious, especially given uncertainties about commodity prices and agricultural output.”
Kwakye said they welcomed measures to support agriculture through the announced modernization scheme and added that “the SME Fund, which supports manufacturing, is the bedrock of the economy; this will create most of the employment and should be supported as much as possible. This is particularly so in the wake of oil production and the potential danger of the ‘Dutch disease setting in.’”
Commenting on the inflation target of 9.5 plus or minus 2% for 2014, the renowned economist noted that “the inflation target does not seem ambitious enough. High inflation is a persistent problem in Ghana. He continued: “We have long been in breach of the West African Monetary Zone (WAMZ) convergence criterion of less than 5% while globally, inflation has been subdued. Cost-push factors in terms of exchange rate depreciation, fuel and utility price increases, high food prices and demand pressures generally have been the drivers of inflation. It will take fundamental transformation of the economy to address supply constraints, and sustained macroeconomic stability to tame inflation in the country.”
