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Fiscal consolidation, peaceful elections key to Ghana’s economic recovery – Outlook

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Seth Terkper - Minister of Finance
Seth Terkper – Minister of Finance

The 2016 African Economic Outlook has reiterated that the recovery of Ghana’s economy and the expected GDP growth of 5.8 per cent in 2016 and 8.7 per cent in 2017 is contingent on the success of the ongoing fiscal consolidation.

Amidst concerns surrounding a repeat of Ghana’s ritual election year budget overruns, the 15th edition of the annual journal by the African Development Bank (AfDB), the OECD Development Centre, the UNDP and the UN Economic Commission for Africa, adds that credible peaceful elections in 2016 after the keenly contested 2012 elections and the following legal dispute, will also be key.

The position follows a proposition by the World Bank that the success of Ghana’s fiscal consolidation is vital for economic growth and poverty reduction.

Other important factors cited by the African Economic Outlook 2016 for Ghana’s recovery in the medium term, include new oil and gas production from the TEN and Sankofa projects, and an improvement in the harvest of cocoa, gold production and power supply security.

According to growth figures by the Ghana Statistical Service, the quarterly GDP growth rate broke the 4 per cent mark for the first time in 2015, during the last quarter when the power crisis began to ease.

Ghana’s economy grew by a provisional 3.5 per cent in 2015, down from 4 per cent in 2014 and the lowest in 15 years, stifled by a protracted energy crisis, low commodity prices and fiscal consolidation measures supported by a three year Extended Credit facility by the International Monetary Fund.

According to the Outlook, Ghana is expected to satisfy further reviews by the IMF in 2016, on the fiscal consolidation programme, after having passed the first three reviews.

By Emmanuel Odonkor

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