GDP likely to exceed 4.1% target - Dr Sam Mensah predicts
Ghana’s projected Gross Domestic Product (GDP) for the end of this year is likely to go higher than the projected 4.1 per cent. The technical advisor to the Ministry of Finance, Dr Sam Mensah, said predicted.
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“Our GDP can go higher at the end of the year because of the positive signals on the wall,” he said although he did not give a definite figure.
In an interview with the Daily Graphic in Accra, he said “There are some positive things on the horizon, for instance; the TEN project which just started producing oil, Sankofa fields which is coming up early next year are all indications pointing to higher growth than we anticipated but we will remain modest.”
The development in the country’s oil and gas fields are likely to positively affect the growth of the economy.
Prior to the development of the new oil and gas fields, that is, TEN and Sankofa, the Jubilee fields has been the only reliable source of oil revenue. Unfortunately, instead of the country hitting production targets of about 120,000 barrels per day (bpd), challenges with the Floating Production Storage and Offloading (FPSO) and other operational challenges had negatively impacted production figures.
Oil price drops, since the year began, also affected revenue projections both culminating in the revision of the GDP growth target from 5.4 per cent for 2016 to 4.1 per cent.
With the two new fields coming on board, there are reports that the production numbers will hit about 200,000 bpd a situation which is expected to impact on the overall growth in GDP.
Investor confidence
Dr Mensah said investor confidence in the country was beginning to grow again because of the positive developments and the bright outlook within the economy.
According to him, the developments in the oil fields were all offsetting factors which have given the investors some confidence, adding that this can have a positive impact on the economy.
Dr Mensah said on the recent roadshow the government embarked on, “we emphasised current positive developments which previously were not taken into account as far as the GDP was concerned. We are highly hopeful the positives will show in real numbers.”
Elections and credit rating
The International rating agency, Moody’s, last Monday moved Ghana’s credit rating from negative to stable outlook in what has sparked excitement among government officials because of the impact that might have on its election fortunes.
The first driver for its decision according to the rating agency was the "significant deficit reduction and institutional reform implementation over the past year under the umbrella of the three-year International Monetary Fund (IMF) programme which started in April 2015."
The second had to do with the reduced government liquidity risk on the external side after the successful issuance of a recent $750 million Eurobond earmarked to redeem the remaining $400 million October 2017 Eurobond maturity.
Moody’s further explained that the third reason was the improved balance of payment dynamics, amid continued development of oil and gas resources through higher foreign direct investment inflow, supporting reserve buffers and reduced currency volatility.
On the question of whether government was satisfied with the rating, Dr Mensah said from “our perspective its could be better; But first they may be watching the election to prevent over spending and that there is no post-election blues.”
Dr Mensah said, “once we are out of the election, a major uncertainty will be removed and that may pave the way for a better rating to suit what is on the ground now.”
Another major boost, he said was that the country had now found the money to “pay off the Ghana 2017 bond. It’s a major thing off the table.”
