The World Bank says the success of Ghana’s ongoing fiscal consolidation programme is vital to the continuation of Ghana’s success in poverty reduction.
Ghana halved the poverty rate from 52.7 per cent in 1991 to 21.4 per cent at 2012, less than the regional average of 43 per cent in 2012. The country also improved significantly in non-monetary indicators of poverty such as infant and under-five mortality.
With mounting public debt, fiscal deficit and other worsening metrics Ghana began fiscal consolidation in 2014, with the International Monetary Fund (IMF) approving a $918 million Extended Credit Facility (ECF) to aid the country’s efforts.
Ghana has since undergone three successful reviews under the ECF.
A World Bank report on the successes and challenges of poverty reduction in Ghana warns that while Ghana has been more successful than other African countries in sharing prosperity and translating economic growth into poverty reduction, the country “needs to succeed” in the ongoing fiscal consolidation, and preventing further deterioration in the macroeconomic environment is the most immediate policy priority.
“The success of the programme hinges on a sustained commitment to fiscal discipline, rapid progress in structural reforms, and the reduction of inflation,” the report says.
With growth strongly associated with poverty reduction, Ghana’s recent low growth rates due to the ongoing fiscal consolidation, inflation and energy security challenges, pose a hurdle to poverty reduction in the country.
The report recommends that Ghana improves the business climate to enable the private sector flourish and create high productivity well-paying jobs; and invest in infrastructure and skills development to increase agricultural productivity, create modern jobs and build skills for new job opportunities.
The World Bank says that although tackling the growing inequality in Ghana is a longer-term development challenge, it is key for consolidating the country’s middle-income status.
By Emmanuel Odonkor
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