Ghana’s macroeconomic performance has been mixed, and over the years recurrent policy slippages have amplified the impact of external and domestic shocks, created persistent imbalances and contributed to high inflation, exchange rate volatility and unfavourable debt dynamics.
The government, therefore, faces significant challenges, including a large fiscal slippage that occurred in 2016. Addressing these challenges calls for an ambitious adjustment and reform agenda.
The outlook for 2017 is promising, with a growth rebound driven by a large increase in oil production, declining inflation and lower internal and external imbalances if the right policies are implemented.
But downside risks remain, as fiscal slippages could feed into continued cedi depreciation, compound adverse debt dynamics and create inflationary pressures.
At the same time, the government faces significant contingent liabilities from energy sector state-owned enterprises, the financial sector and the unpaid claims incurred in 2016 currently being audited.
It is the view of the Daily Graphic that despite our economic shortfalls, the country has come a long way in achieving economic prosperity and lifting the living standards of its citizens.
We say this because compared to regional peers, Ghana has long enjoyed political stability and relatively robust and diversified growth.
However, policy implementation has ebbed and waned; the resulting bouts of macroeconomic instability have, in turn, set the country back, especially when large fiscal slippages have occurred in election years. In 2016, the deficit rose to 9.3 per cent of GDP.
The Daily Graphic is happy that growth is projected to increase in 2017, on the back of a significant increase in oil production; investors have shown a strong appetite for Ghana’s debt; inflation has been declining and is projected to fall to the upper band of the inflation target by year-end; the exchange rate has stabilised after a period of volatility in the first quarter and the Bank of Ghana (BoG) is set to add $800 million to its net reserves in 2017, the largest increase since 2011.
The challenge the country faces is matching its revenue with expenditure.
The Daily Graphic calls on the government to find innovative ways of expanding the tax net and help rope in the large workforce in the informal sector.
We, however, caution the government not to overstretch the few in the public sector who are already overburdened with taxes.
The government must step up efforts to widen the tax net to include everybody who earns income. Afterall, Ghana’s development processes can only achieve results with increased revenue, since the government relies on taxes to implement its policies.
The Daily Graphic, therefore, urges the citizenry to file their tax returns, so that the country gets more revenue to match its expenditure.
Anything to the contrary is not an option if we are determined to change the fortunes of all.