Ghana launches new model to analyse, forecast economic policy decisions

The Ministry of Finance and Economic Planning (MoFEP) is optimistic that Ghana’s development partners will be confident in the country’s macroeconomic policy statistics, following the launch of a multi-sectorial macroeconomic policy model for forecasting and analysing of the government’s economic policy decisions.

The Technical Advisor on Macroeconomics at the MoFEP, Dr Said Boakye, who made the observation during the launch of the model in Accra, said the interconnected and scientifically-based nature of the model should make its use authentic in the eyes of policy analysts and development partners.

The model which is titled: “A macroeconometric model of the Ghanaian economic for policy scenario analysis and macroeconomic forecasting”, will replace the inter-sectorial macroeconomic policy models that existed and were used prior to the model’s coming into being.

The 27-page model was developed by MoFEP’s Technical Advisor on Macroeconomics, Dr Said Boakye, in collaboration with the German Development Cooperation (GIZ).

Presenting the model to policy analysts, economists and some of Ghana’s development partners as part of its launch, Dr Boakye said the interconnected nature of the current model in analysing and forecasting government policies made it a credible tool for forecasting.

He explained that unlike recent developments in the country’s economy such as the rebasing which saw services overtaking the agricultural sector, the emergence of oil production and the now inter-connected nature of the various sectors, macroeconomic forecasting and analysing models had failed to catch up with the trend, a situation he said was causing Ghana’s development partners to cast doubts on her macroeconomic statistics.

He said though other models existed prior to this current model, “those models were developed on sectorial bases and were basically not scientific” thereby adding to doubts over the authenticity or otherwise of data compiled from them.

He was thus hopeful that the current scientific nature of the macroeconomic model of the Ghanaian economic for policy scenario analysis and macroeconomic forecasting will serve as a mutual benefit to Ghana and her development partners.

“We also think the model will help minimise the incidence of our development partners imposing their policies on Ghana,” the MoFEP Technical Advisor on Macroeconomics added.

Macroeconomic forecasting and analysing models are benchmarks used as bases for analysing and predicting the effects of major government policies and economic decisions.

Ghana, until now, had been relying on inter-sectorial models developed by various local economists, many of which Dr Boakye said were unscientific and unreliable.

He described the model as one focused on policy issues and “reflects the most current developments in our economy”, therefore it will endear the model to policy analysts and development partners.

On why the model omitted the labour market despite the area’s increasing importance in policy issues (due to hiking unemployment), Dr Boakye said “it was my plan to include that sector in the model. Sadly, however, statistics on that sector does not exist and that made it impossible capturing it.”

He thus charged on the Ghana Statistical Service to compile statistics on the said areas to help research and the formulation of policies.

The model used the country’s economic policy data and statistics compiled from 1983 to 2010.

Source: Daily Graphic