Ghana’s Economy is Stable - Lecture

Participants at a roundtable yesterday unanimously agreed that macro-economic stability being achieved by the country was good for development but wondered why the individual was not feeling the growth in their pockets.

Some were of the view that there should be a trade-off from macro-stability level for economy to perform in such a way that the poor could experience real growth so that wealth was not concentrated in the hands of the few.

The discussions were provoked after Mr Emmanuel Codjoe, Lecturer, Department of Economics, University of Ghana, led a discussion on the "Mid-Year Review of the Performance of the Economy of Ghana in 2006.”

He said industry and service played a key role in ensuring growth in the economy and that although the Government had said that there was creation of jobs for more than 50,000 people, the country was not told how many jobs were lost.

There was a 7.7 per cent growth rate in industries and a 6.9 per cent growth in services in 2005 from banking, insurance, telecommunications, hotels and restaurants. He told the roundtable, organised by the Private Enterprise Foundation (PEF) and supported by the UNDP: "The 2006 Budget Statement and Economic Policy of the Government was broadly anchored within the framework of the Growth and Poverty- Reduction Strategy II, with a theme that seek to invest in people and invest in jobs."

He asked: Investment was in what kind of people and what kind of jobs and whether the investment was to be in people digging holes and refilling it?”

Mr Codjoe said total expenditures witnessed significant growth and mentioned manufacturing sales, job vacancies, tourists' arrivals and the rise in the number of private sector contributors to the Social Security and National Insurance Trust (SSNIT). He pointed out that inflation, interest rate and exchange rate remained relatively under control.

The initial success at holding down inflation and achieving single digit rate of inflation, however, appeared to be suffering a reverse.

On taxation, Mr Codjoe said the tax system could be described as injurious but was quick to add that there was improvement in tax assessment and expenditures.

Commenting on the Cedi to Euro, Pound Sterling and Dollar movement, Mr Codjoe said the rate in terms of exports was not good for exports because domestic cost of production was high while that of imports was good.

He said that the cost structure was unattractive with respect to Chinese companies doing business in the country since they were efficient and kept their cost low.

Mr Martin Addae, Deputy Commissioner of the Internal Revenue Service (CIRS), in charge of Research, Planning and Monitoring, responding to the tax system in the country commended the Government for the tax incentives declared in the 2006 Budget. He revealed that the Government lost 971.706 billion cedis as a result of the tax incentives and that with time revenue generation would square up with the losses.

"IRS was down five per cent as at June this year due to measures announced in the 2006 Budget," reiterating that the amount was lost because IRS could not meet the target they set.

Mr Addae pointed out that the incentive packages were meant to encourage more people to pay taxes and to help the country to generate more revenue.

Mr Paul Nkansah, Deputy Commissioner of the Customs Excise and Preventive Service (CEPS) in charge of Research, Monitoring and ICT, who shared the same concern, said CEPS had also lost about 145 billion cedis as a result of incentive packages for manufacturers among other things.

Mr Wilson Attah-Krofah, President of the PEF Governing Council, who co-chaired the forum, said PEF felt duty-bound to monitor the implementation of the budget proposals to ensure that the analysis would help the sector to play its desired role.

Dr Osei Boeh-Ocansey, Director-General of PEF, urged the Government to make businesses more attractive for the private sector. He said PEF would collate the views into official report to be forwarded to the Minister for Finance and Economic Planning.