Ghana must develop its own macroeconomic model - ISODEC
Accra, Jan. 27, GNA - Ghana needs to develop its own macroeconomic model to make inform decisions rather than rely on the Breton Woods Institutions' model, which had proven ineffective and unreliable, Mr Bishop Akolgo, Acting Executive Director of the Integrated Social Development Centre (ISODEC) said on Thursday.
He said an empirical analysis conducted in Ghana in the 1990s under the Structural Adjustment Policies of the World Bank and International Monetary Fund (IMF) had clearly indicated that informed and helpful choices could be better made when the country got its own macroeconomic model in place.
"As it is now, the model we have are only in the minds of people but we need to come to the stage where we would have on paper, black and white what we can call our own," he said.
Speaking at a two-day international roundtable discussion on the macroeconomic and poverty reduction in Ghana in Accra, Mr Akolgo said the research sought for analytical tools that would meet the test of the best intensions of the Poverty Reduction Strategy Paper.
The workshop being organised by ISODEC in collaboration with the United Nation Development Agency (UNDP) is aimed at exploring emerging macroeconomic issues and policy options to enhance Ghana's efforts at poverty reduction.
Mr Akolgo said a key recommendation of the research analysis was the building of a Distributional Effects of Economic Policies (DEEP) contextually rather than adopt a generic model.
He said agreeing on DEEP's basic structure among the local research community with the involvement of Government officials had proven to be an exercise of internal policy dialogue, which meant that there was the need to build a constituency to demand good quality data.
He said this had many headaches but also with many rewards such as the immense internal learning and local coalition building.
Mr Akolgo said analysis of the central and local government budgets on poverty reduction and equity showed that expenditure and revenue allocation were merely instruments to achieve government policies and were conditioned and constrained by the macroeconomic framework.
"After nearly 20 years of economic reforms, the crisis remain the same, even worsening in some respects," he said.
On debt servicing, Mr Akolgo said the implementation of the DEEP would help to develop the capacity to assess the impacts of current and alternative debt management strategies.
He said IMF over the years had preferred reduction in government investment expenditure to finance debt servicing, supported by new loans and foreign aid and even the HIPC but this had "kept external debt rising apace".
Mr Akolgo said given the IMF single digit inflation policy, the central bank has rewritten its banking laws to focus on inflation ignoring other key macro-economic variables such as employment. He said there was the need to stimulate domestic debate about alternative and policy trade-offs, noting that the DEEP would help assess the impact of a persistently dis-inflationary approach on employment and livelihood of the poor.