Graphic Business News

Economy on track, challenge now on sustainability — PwC

By: Emmanuel Bruce
• From left Mr Ken Ofori-Atta, Ms Ayesha Bedwei, Dr Osei Asibey, and Ms Fatima Alimohammed during the panel discussion
• From left Mr Ken Ofori-Atta, Ms Ayesha Bedwei, Dr Osei Asibey, and Ms Fatima Alimohammed during the panel discussion

Tax and Accounting firm PwC Ghana has indicated that the economy is on track as government’s policies and programmes have led to macroeconomic stability.

It said the major macroeconomic indicators were now trending in the right direction and, therefore, urged the government towards sustaining the gains.

This was disclosed by the Associate Director of PwC, Mr Abeku Gyan-Quansah, at the post-budget forum which was organised by the firm in Accra.

“Government is on track towards achieving macroeconomic stability; however, sustainability of the gains so far and the implementation of various initiatives remain the challenges,” he stated.

He, therefore, encouraged the government to continue in its efforts in domestic revenue mobilisation by enhancing tax compliance in order to consolidate the gains that have been made in 2017.

He also urged the government to ensure a sustainable debt management system and also increase investments in the agriculture value chains and growth-enhancing infrastructure.

Mr Gyan-Quansah believed this would further help improve and sustain the macroeconomic environment in the country.

Relief to Ghanaians

At the forum, the Minister of Finance, Mr Ken Ofori-Atta, also pointed out that the policies implemented by the government were yielding results and bringing relief to Ghanaians.

“We have turned the economy around and our policies are yielding results and bringing relief to Ghanaians,” he stated.

“We resolved to be fiscally disciplined and respect the limits that Parliament set for us. I am glad to report that we are on course to end the year with the fiscal deficit of 6.3 per cent from 9.4 per cent,” he added.

The minister also highlighted some of the gains that were made in 2017, which included the growth of GDP by 7.8 per cent as against 2.7 per cent in the same period in 2016. It is estimated to grow by 7.9 per cent at end of 2017, up from the original forecast of 6.3 per cent.

Non-oil real GDP also grew at an estimated 4.0 per cent compared to 5.9 per cent in the same period in 2016. Non-oil GDP growth is estimated at 4.8 per cent at the end of 2017.

End-period inflation was 11.6 per cent in October 2017, compared to 15.8 per cent in the same period in 2016.

The overall budget deficit on cash basis was 4.5 per cent of GDP in September 2017 against a target of 4.8 per cent of GDP and an outturn of 6.4 per cent in the same period in 2016.

The primary balance posted a surplus of 0.3 per cent of GDP in September 2017, as targeted, and is a significant improvement over a deficit of 1.6 per cent realised during the same period in 2016.

The current account balance registered a deficit estimated at 0.2 per cent of GDP in August 2017 compared with 2.6 per cent in August 2016; and the country’s Gross International Reserves which stood at US$6.9 billion by the end of September 2017 could cover 3.9 months of imports, compared to the US$4.8 billion or 2.5 months import cover recorded in the same period in 2016.

Panel discussion

Contributing to a panel discussion at the forum, an economist and a senior lecturer of the University of Ghana, Dr Eric Osei Assibey, also commended the government for improving the country’s macroeconomic environment.

“From the macroeconomic perspective, I think the government has done well by stabilising the economy. Seeing inflation coming down, exchange rates stabilising and closing of the deficit gap is very good for the economy,” he stated.

He also commended the government for its fiscal consolidation efforts but added that it must work to ensure debt sustainability.

He, however, urged the government to put in more efforts in mobilising enough domestic revenue to ensure that it does not always have to cut expenditure to ensure fiscal consolidation.

“If you want to ensure fiscal consolidation, you look at either increasing your revenue generation or cutting expenditure or the combination of the two; but we have so far achieved fiscal consolidation largely because we cut expenditure and that is good, but to what extent can we continue to do that?” he quizzed.

A Partner of PwC, Ms Ayesha Bedwei, for her part, pointed out that most of the good initiatives in the 2017 budget were washed out at its implementation stage and could, therefore, not have the required impact.

“The issue has always been with implementation, which has always been problematic. For example, when we look at the VAT flat rate which was also introduced from the time it was stated in the manifesto, it was clear that it was targeted towards small and medium enterprises (SMEs), but by the time it went through the various legislative processes and was passed, the meaning had changed and, therefore, larger companies were also affected and this resulted in increased cost,” she noted.

“There were a lot of such laudable initiatives in the 2017 budget but some of them washed out at the implementation level and we will like to see some changes in 2018,” she added. — GB