EDITORIAL: Not Yet Out Of The Woods
The President, Professor John Evans Atta Mills in his presentation of the state of the nation’s address to Parliament Thursday, said among other things that the country’s economy was booming with the recording of a 14 per cent growth and the achievement of a single-digit inflation of 8.55 per cent, the lowest in 42 years.
He further stated that by the end of September 2011, the budget deficit was two per cent of Gross Domestic Product (GDP) compared with 14.5 per cent in 2008 and that the positive economic indicators the country had achieved had resulted in increased confidence in the economy.
On Wednesday February 15, the Governor of the Bank of Ghana Mr Kwesi Amissah-Arthur assured foreign investors in the financial markets of higher returns on their bonds if they allow them to mature.
This assurance follows large withdrawals of investments from the economy and the sale of bonds and other instruments by offshore investors on the country’s financial markets due to the fear of a weaker cedi.
The withdrawals of funds by these investors in the Ghanaian financial market have partly caused the cedi to depreciate at a faster pace of 5.9 per cent, compared to 1.9 per cent in January 2011.
For any economy to be said to be sound does not only lie in the growth rate of its GDP or the stability in its inflation figures but must equally have a very sound financial systems that can withstand any level of shocks.
If the country’s gross international reserves begin to decline from US$5.4 billion in 2011 to US$4.6 billion in January 2012 and foreign investors begin to redeem their investments before the maturity dates then the country is in for a serious trouble.
For the Graphic Business, it is not yet to be complacent with our modest economic achievements as we are not yet out of our economic quagmire. We have been witnesses to the Asian financial crisis and we are equally witnessing what is going on in Europe, especially in Greece.
We need a very strong and robust financial market as we cannot just fight inflation with the hope that we can have stability and growth. Growth and development can only take place if we have very strong and stable financial market.
For the country to have good and sound financial market and to attract offshore investors will be highly dependent on the nature of policies that we put in place. Foreign investors are extremely cautious about their investments and if a country does not provide that needed security, sorry they will not look at that direction.
Much as we are caring for the foreign investors, we must equally take into consideration the plight of the domestic investors those who produce for the export market.
These are the entities that will enhance the strength of our local currency and raise the level of our gross international reserves. GB.
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