5.8% GDP Growth Impossible - Budget Review
The Government's target of achieving a 5.8 per cent real Gross Domestic Product (GDP) growth rate for this year has been described as unattainable.
This description was made by a mid-year budget review committee of the Department of Economics, University of Ghana and sponsored by the Private Enterprise Foundation (PEF).
According to the presenter, Mr. Emmanuel Codjoe of the Economic Department of the University of Ghana, the performances of the Cocoa Sector had been the driving force in real sector growth and the food crop sector, which he said fell below expectation, compared to the 2004 figures.
But the spokesman for the ministry of finance, Nana Ohene Ntow told The Business Chronicle that the 5.8% GDP growth target of the government would be unattainable in the face of international crude oil price escalating.
Presenting the study, on Thursday, at a roundtable in Accra, Mr. Codjoe said indications were that, cocoa production for this year would be 550,000 tonnes, compared to 700,000 tonnes produced last year, representing a shortfall of 150,000 tonnes against the projection of a 13% increase over the 2004 output.
He said food and crop production, quoting from the Ministry of Food and Agriculture information, which indicated an aggregate food shortage of 400,000 tonnes this year, was due to the irregular rainfall pattern in Southern Ghana.
On the overall economy's performance, Mr. Codjoe said the Government's macro economic targets were significantly attained and this had led to a relative stable economic environment, with low inflation rates, lower policy interest rates, relative stable currency and strong, external reserves.
The lecturer said a question that needed to be addressed was how the private sector was bracing itself to respond to these favourable conditions, adding: "These achievements are not mere statistics, but changes that could lead to fundamental transformation of the economy and in the lives of the citizenry."
He noted that during the period under review, domestic tax revenue growth was strong, amounting to 8,045 billion. This represented 20 % of GDP when annualised, and a 25.7% increase over what was realised over the same period in 2004.
He said the overall Central Government budget recorded a deficit of ¢1,512.5 billion, which was about 1.56 % of GDP, exceeding the programmed deficit of ¢772.1 billion.
The domestic primary balance, however, recorded a surplus of ¢1,293.3 billion, representing 1.34% of GDP.
The budget target for the period was ¢1,348.8 billion, equivalent of 1.40% of GDP.
Mr. Codjoe said caution should be taken in not to oversimplify access to credit and noted that there were reliable and useful procedures and conditions to be observed in the credit market. For the way forward, he said the private sector's expectation of the 2006 budget would be to see a budget that would give more hope, remove obstacles in industrial activities and focus on processes for production. Mr. Codjoe urged the private sector to show more commitment in its entire role as the engine of growth, saying: "The budget will supply the oil for the engine." Nana Ohene Ntow was the chairman. Representatives from all financial institutions were present.