Government has been advised to desist from large scale intervention packages to allow for sustainable recovery of economic growth and stability in the face of easing pressure of global financial recession on the country’s wealth.
Additionally, government should desist from guarantees, large deposit insurance, ownership and asset acquisition in a manner that gave consideration to macro-economic conditions and within the country’s fiscal constraints.
The advice was made in an eight-chapter document entitled: “The State of the Ghanaian Economy Report, 2009” launched on Thursday in Accra.
It was published by the Institute of Statistical Social and Economic Research (ISSER).
Dr Felix Asante, Senior Research Fellow and Head of Economic Division of ISSER, in a presentation of the overview of the report, said the global financial crisis had opened up the debate for the scope of macro-economic policy and what it should cover.
According to him issues including the objective of monetary policy and the relationship between monetary, regulatory and fiscal policy should be discussed, the desirability of ‘fiscal space’ to run larger fiscal deficits when needed as well as the issue of whether monetary policy should be concerned with financial market development should be addressed for an informed broad policy reform agenda for the future.
Speaking on the outlook for fiscal development in 2010, Dr Asante suggested that “since fiscal sustainability depends on cost-effectiveness of expenditure programming and a reliable revenue mobilisation strategy, reducing the budget deficit while making an attempt to boost the economy through an increase in government expenditure requires effective financial management.”
He said fiscal discipline seemed to have improved in 2009 and expressed optimism that it would continue in 2010.
On monetary and financial developments, Dr Asante said the year under review recorded a worsening of some key monetary indicators compared to the preceding year adding that high oil prices, global financial crisis and rising food prices had had severe repercussions on the economy.
Dr Asante expressed disquiet that lack of access to credit by certain key sectors such as agriculture and manufacturing, would result in the inability for the private sector to expand thereby worsening unemployment situation in the country, especially among the youth.
“Though inflation would continue to decline as a result of the tight fiscal policy being pursued and government continues to reduce its domestic borrowing, if the structural bottlenecks that affect food production and distribution are not addressed, the fall in inflation cannot be sustained,” he said.
Dr Asante called on policy makers to take a cue from the key lessons from the recent global economic recession to seek a way of having a more diversified base to reduce its dependence on a few primary commodities and facilitate a more sustainable growth and development.
Professor Clement Ahiadeke, Acting Director of ISSER, noted that the 2009 report had additional chapter specifically reserved to discuss the issue of youth unemployment, a situation he described as gloomy in the country but critical for development.
Prof. Ernest Aryeetey, immediate past Director of ISSER and now the Vice Chancellor of University of Ghana, appealed to universities and researchers to engage government in discussions on issues bordering on socio-economic development to turn around the fortunes of the economy.
Dr Nii Kwaku Sowa, a Research Fellow at ISSER, said Ghana’s economy needed a vigorous analysis in order to make policy makers and implementers improve the economy.
He expressed worry that unqualified persons used some media outlets and unreliable data to make analysis of the economy, misleading the citizenry.