2012 budget sets stage for Ghana’s growth – PwC
The Ghana unit of UK-based accounting firm, PricewaterhouseCoopers (PwC) says the 2012 budget presented by the Ghana government November 16, 2011 has set the stage for the country’s growth.
According to PwC, macroeconomic policies that government has pursued over the last few years have shown positive results – “a sustained drop in inflation to single digit, a relatively stable currency against the major trading currencies and an improved budget deficit position (September 2011).”
“This gives a solid basis for Ghana to optimise its potential as an emerging lower middle income economy… The 2012 Budget has set the stage for Ghana’s growth,” said PwC in its commentary analysis of the budget released November 21, 2011.
There is evidence of a sustained growth in Gross Domestic Product (GDP) from 4.0% in 2009 to 13.6% in 2011, text of the analysis said
It adds that the increased access to credit, falling trends in lending rates and increased foreign direct investments (FDIs) all suggest increased investor confidence in the domestic market and an improving economic environment.
With all these improvements, PwC says “it is no surprise that the International Monetary Fund (IMF) considers Ghana as one of the fastest growing economies in the world today. Interim data on implementation of the 2011 Budget over the first three quarters indicate that revenues were above the budget target by 8.4 % while expenditures remained lower than the budget estimate by 1.2 %.”
The analysis opined that the 2012 budget, which is the fourth for the current administration, seeks to answer the question of how sustainable is the improvement in fiscal/economic performance given that most of the critical subsectors such as manufacturing, financial services, agriculture, and hospitality did not achieve their 2011 targets.
It is estimated that meeting Ghana’s infrastructure needs over the next ten years would cost approximately $1.6 billion per year.
“For 2012, government plans are underpinned by infrastructure investments across various sectors including oil and gas, power, transport, roads and highways, water, housing, education, health and services,” PwC indicated.
The analysis however, cautioned government about the $3 billion China Development Bank (CDB) facility saying “it is imperative that planned initiatives to reduce infrastructural deficit using the $3 billion CDB facility should be diligently and expeditiously executed to achieve the desired impact.
It noted that the real economy for the various sectors grew by 4.2% for Services, 2.8% for Agriculture and 32% for Industry (due to Oil and Gas).
It said the 2012 budget also highlights the traction gained on stabilisation of the fiscal policy and showcases the continued tax reforms in both the personal and corporate tax arena, healthcare, food and agriculture sectors.
PwC highlighted some key points in the budget – it includes several reforms and policy initiatives designed to create an enabling environment for infrastructure development, the inclusion of the private sector, especially Small and Medium Enterprises (SMEs) and various revenue enhancement measures.
According to the firm, the sustained efforts of government to deepen the activities of SMEs are commendable since they are a catalyst to growth and require significant attention.
“Government plans to promote SME listing on the Ghana Stock Exchange and initiatives by the Trade Ministry to provide access to credit by way of grants are all steps in the right direction,” it said.
Given the reported achievements of 2011, PwC said the targets set for 2012 should be ‘realisable’ as they are rather ‘conservative’.
It urged government to ensure strict fiscal discipline so as to sustain the gains achieved to date in light of the fact that 2012 is an election year
In conclusion, PwC said “the budget sets out the road map towards addressing the current infrastructure deficit. If successfully implemented it should make Ghana an attractive destination for foreign direct investments and also encourage domestic investments participation. This should assist in realising the desired accelerated economic growth, improved infrastructure and job creation.”
By Ekow Quandzie