Fragile economic fundamentals exposed by COVID-19, others
Economic and Finance experts say the COVID-19 pandemic, the banking sector clean-up and the energy sector challenges have exposed Ghana’s “fragile economic fundamentals.”
Dr Priscilla Twumasi Baffour, Senior Lecturer at the Department of Economics, University of Ghana (UG), Courage Boti, an Economist and Mr Pierre Frank Laporte, the World Bank Country, Africa, said issues about the economy were not about mismanagement but fragile fundamentals.
They noted that though governments had over the years taken measures to make the economy strong, the fundamentals had not been resilient enough to withstand major shocks.
Additionally, the sources of growth had not generated the required decent employment, thereby, making the economic fundamentals volatile.
The economic fundamentals -inflation, Gross Domestic Product (GDP), GDP to debt ratio, exchange rate, and gross international reserves-are important in measuring the “general health” of the economy.
As such, the fundamentals, [when strong enough and stable], help in driving investment into the country and propel development.
In an interview with the Ghana News Agency in Accra, Mr Boti, said: “Our economy has never at any point in time been very resilient to the point that we’ll say that it is mismanagement that is causing what is happening now.
“Every effort to make it resilient was at its formative stage and the gains were very fragile,” he said.
“The fragile gains made on the macro economy were tested by COVID and all of them went trembling. Currently, the economy is challenged because the fundamentals that were put together didn’t get to the level where it can withstand the shock,” he added.
The Economist explained that it would take handlers of the economy some ample time to be able to build such an economy, whose fundamentals would be resilient to any form of shock.
“There’s no one solution for it [the economic fragility] but it’s about consistency in the initiatives and the efforts that bring about the stability we’re looking for, to the point where they become irreversible,” he said.
Delivering a keynote address at the Annual New Year School, Mr Laporte, the World Bank Country, Africa, said “notwithstanding Ghana’s strong pre-COVID growth, it came into the crisis with a certain degree of fiscal fragility, and a level of borrowing that was not matched with a required level of revenue mobilisation.”
For her part, Dr Baffour, said, there was the need to match the sources of growth with employment to prevent the volatility, which would make the growth reflect in people’s pocket.
“For us as a country, the challenge has been a consistent growth path; we seem to be doing great at certain times then we take a huge dip. When you look at when Ghana obtained a lower middle-income status in 2011, we grew at 12 percent plus, but that was on the back of the discovery of oil and the following year we couldn’t keep up,” she noted.
Mr John Ampontuah Kumah, a Deputy Minister of Finance, said, “these are the realities of the times, but if you listen to international news, you realise that Ghana is not alone.”
“Recovering from all these things may take a while, but I assure you that the managers of this economy understand what they’re doing and we’re on the right path of growth. If we’re able to maintain our growth rate consistently for five to ten years, we’re going to see massive transformation of our country,” he said.
Source: GNA