Ghana’s economy needs serious restructuring-ISSER
By Masahudu Ankiilu Kunateh, Ghanadot
Accra, Aug 21, Ghanadot - The Institute of Statistical,
Social and Economic Research (ISSER), has vehemently
called on the government to seriously restructure the
Ghanaian economy.
The institute observed that since Independence, the
country has not seen any major restructuring, hence the
dominance of the good old agricultural sector as the
leading foreign exchange earner for the country.
Additionally, apart from the agricultural sector, which
employs about 60% of the population, most of the sectors
are in their infant stages of development.
Launching, the state of the Ghanaian economy report,
2008 and mid year review of the economy 2009 in Accra,
yesterday the Director of ISSER, Professor Ernest
Aryeetey intimated that the current global economic
crisis presented Ghana the opportunity to take domestic
revenue mobilization seriously and to wean off the
country from depending on donor countries for survival.
He noted that Ghana entered the year 2008 with
considerable excess baggage on account of severe
instability in the global economy, citing high food
prices from 2007 continued into the middle of 2008 with
consequences for food and nutrition security on the
economy.
Towards the end of the food crisis, oil prices began to
soar, rising from $50 at the beginning of the year to
$126 per barrel in June, last year.
Prof. Aryeetey indicated that African economies had been
doing pretty well with unprecedented growth, both from
the commodity boom and improved macroeconomic
management, until both crises hit the continent.
He added that Ghana was one of the African countries
generally doing well until the different crisis hit it,
having managed growth of over 6% and inflation of just
over 10% for a number of years before the crises.
The GDP growth rate was 7.3% in 2008 after 6.3% in 2007,
while inflation at the beginning of the year was 12.8%
at year end.
Due to poor fiscal management, domestic primary
expenditure jumped 5.9 percentage points from 32.3% of
GDP in 2007 to 38.2% of GDP in 2008, whilst domestic
revenue rose from 26.1% of GDP in 2007 to just 27.9% of
GDP, last year.
Indeed, the high budget deficit, inflation and interest
rate pressures had repercussions on the foreign exchange
market. As the Ghana cedi depreciated against the US
Dollar by 25.2% and by 19.52% against the Euro but
depreciated by 7.4% against the British Pound Sterling
between end-December 2007 and December 2008.
Ghana’s economy has been described as robust since 2005
and this description was used even in 2008, despite the
fuel price shock and the effects of the global financial
crisis.
The real GDP growth rate 7.3% recorded for 2008 reflects
mostly a general increase in government consumption
spending and investment.
This Prof. Aryeetey said raised the question of the
meaning of growth within the poor country context and
its sustainability within a stable macroeconomic
environment.
On sectoral performance, he noted that the service
sector grew by 9.3% in 2008 compared with 8.1% for
industry and 5.1% for agricultural sectors.
Presenting the mid year review of the 2009 economy, A
Research Fellow at ISSER, Dr. Charles Ackah disclosed
that the prospects for the current second half of 2009
appeared to be brighter than the initial, rather
subdued, estimates that followed in the immediate
aftermath of the financial crisis.
He argued that “Ghana is feeling the impacts of the
crises” as inflation still remains high and government
fiscal position also remains shaky.
Ghanadot
