Ken Ofori-Atta's audacious plan to turn economy around
Finance Minister-designate, Mr Kenneth Ofori-Atta, has pledged to pursue an audacious economic plan that will focus on reducing inefficiencies and boosting revenue to ensure that every Ghanaian enjoys "the minimum threshold of development" that he or she deserves.
Advertisement
By bringing interest rates down and stamping out corruption and leakages in the public sector alone, Mr Ofori-Atta believes the country could save in excess of US$6.4 billion — equivalent to about 17 per cent of GDP — that is being lost to interest payments and malpractices every year.
“These savings can then be redeployed to productive ventures in the economy or used to cushion the expected "shake up" that the government's intended tax cuts (aimed to boost growth in the private sector) will create in the short to medium term,” he said at the Appointments Committee on January 20.
In the usual calm but composed manner that has characterised his life in the private sector over the years, the former Executive Chairman of the Databank Group said his core aim would be to guide the economy out of its current financial constraints by implementing and pursuing policies that would help stimulate growth in the private sector, plug revenue leakages and reduce non-profitable expenditures.
He will also aim at doubling investments in infrastructure, explaining that the equivalent of 15 per cent of total revenue currently invested in infrastructure was woefully inadequate for a lower-middle income country like Ghana.
"For a country of this nature, 15 per cent of our income being used for capital expenditure infrastructure is inadequate. It has to increase to about 30 per cent," he told the committee.
Context
Mr Ofori-Atta, a veteran investment banker and successful entrepreneur, is seeking the approval of the Appointments Committee, a creation of Parliament, to become the eighth Finance Minister in the Fourth Republic after his appointment by President Nana Akufo-Addo on January 10.
Should he be approved, Mr Ofori-Atta would be taking over a challenged economy whose prospects have dimmed by weak revenue growth in the midst of strong fiscal deficits, bearish consumer and business sentiments and rising unemployment.
Other Trending Stories
After the onset of petroleum production in 2010 pushed growth to 14 per cent in 2011, annual growth has been on a downward trend over the last five years; dropping from 7.9 per cent in 2012 to 3.9 per cent in 2015.
Although the 2015 growth rate is the lowest in about three decades, the World Bank and the International Monetary Fund (IMF) still fear that the economy could grow at a slower pace in 2016 after production in the petroleum sub-sector was hampered by technical difficulties.
While growth slowed in the recent past, fiscal deficit remained strong. Within the period, increased commitments in the public sector has forced the government to turn to commercial loans to make up for the hole created by declining revenue.
The result has been the strong growth in the debt stock from GH¢51.9 billion (55.3% of GDP) in 2013 to GH¢100.2 billion (71.6% of GDP) in 2015 and the lingering concerns over the an unproductive fiscal deficit. Data from the Bank of Ghana showed that the deficit ended November last year at seven per cent, compared to an annual target of 5.3 per cent.
Conscious of these challenges, Mr Ofori-Atta said his administration would focus on exploiting the untapped potentials of the private sector to grow and help lift economic growth up.
It will do this by supporting the sector with stimulus packages while removing taxes found to be counter-productive to businesses to create the needed space for them to expand and create jobs.