2005 Growth Rate Under Scrutiny - ECA
Ghana's 2004 growth rate announced at the beginning of the year, has again come under severe scrutiny.
The authenticity of the 5.8% growth rate for last year, which was questioned by some individuals and economic institutions, when it was announced in the 2005 budget, has further been described as irresolute by the Economic Commission for Africa.
"My calculations for the growth rate in 2004 was less than 5.8% but in terms of data that was supplied to us that is comparative in the sense that they are standardized across countries," stated the Economic and Social Policy Division (ESPD) Director of the Economic Commission for Africa (ECA).
In remarks to The Business Chronicle in an interview in Accra last Thursday, the Director, Prof. Augustin Fosu, said Ghana did not reach the 5.8% growth rate. "Indeed, Ghana was not among those countries, a dozen of them, advertised with a growth rate of over 5%".
He however was quick to point out that figures for the calculation of the growth rate may come from different sources and that might result in different rates.
The Director has therefore sided with those who say Ghana's growth rate is 'fiveish,' (ie 5 %), declaring it as being more reasonable, according to their figures.
On what to do for Ghana to achieve the Millennium Development Goals (MDGs), he called on the government to grow at about 7% and noted that although it would be tough for the country, an average growth rate of 4.5%, 6.6%, might suffice if the inequality rate was reduced.
The MDGs are supposed to develop the human being and form global partnerships for the betterment of society, he said.
Commenting on the attainment of the target of $1,000 per capita income by 2010, Prof. Fosu said, that could be achieved if Ghana redoubled its efforts in that direction, by doing things well, deepening democracy as well as creating the enabling environment.
He however cautioned political agents not to get into situations where they could not make very important decisions because of disagreement. "We must be patient, persevere and do the right thing," he cautioned.
Prof. Fosu, who was in the country to participate in the two-day workshop on 'The Capital Flows and Current Account Sustainability in African Economies,' which opened in Accra last Wednesday, praised the government for good macro economic policies but added, "they are not enough."
On what drastic measures government should take to turn things around, he said, "Government certainly does have the magic wand, but we believe in government too much."
He advised government not to interfere too much in the allocation of resources, but provide the enabling environment within the framework of the WTO. He said very soon, the government would have a very little leeway for making sure that the cost of doing business was reduced. This was the only way local businesses would have competitive edge over foreign business, he noted and called on government to really concentrate on making cost of doing business less costly for businesses to be profitable and to expand.
Government should be neutral in the provision of the environment for both local and foreign businesses, he further advised.
He said subsidy does not work well in the long run, but in the short, it is alright, except that government does not have funds to subsidize. The best the government can do, according to him, is to reduce the cost of doing business.