General News of Tuesday, 24 June 2014
Renowned Economist and Investment Consultant, Mr Kwame Pianim has urged investors not to view the country’s economic crisis in a pessimistic manner, maintaining that the country’s economic prospects are still good.
Describing the current economic challenges as a blessing in disguise, Mr Pianim said the present conditions would spur people on to be more sensitive to the economy, adding “maybe it will force Ghanaians to open their eyes and then we can get on.”
Speaking at a business forum in Accra, Mr Pianim said the current crisis could be resolved very quickly, explaining that “it is just government expenditure which is too high; we need to put together a national alliance for resolving these problems.”
Banking the economic hopes on cocoa, gold; and other exports, he explained that once the fiscal deficit situation was addressed, these commodities could bring in revenue for the government.
“Cocoa will bring in something, gold, other exports including horticulture, tourism, services can also bring in something so we do not have to worry about the exchange rate volatility because it can be resolved very quickly once the fiscal deficit issue is addressed,” he said.
The Ghanaian economy had since the beginning of the year gone through a lot of downturns which has made the country less attractive to foreign investors.
The local currency has been fast depreciating against the major foreign trading currencies, particularly the US dollar which has shed more than 20 per cent of its value to the dollar since January this year alone. The situation has forced the Bank of Ghana to introduce some stringent directives on the use of foreign currency in the country.
Inflation has also been on the rise since the beginning of the year, with the current rate (April 2014), pegged at 14.8 per cent. The country’s fiscal debt has also been rising.
Last year, the overall budget deficit of the government stood at GH¢9.5 billion or 10.8 per cent of Gross Domestic Product (GDP) as against a target of GH¢8 billion (nine per cent of GDP).
In 2012, the budget recorded a deficit of 11.8 per cent of GDP with total revenue and grants in 2013 amounting to GH¢19.2 billion, against a budget target of GH¢22.5 billion.
Mr Pianim said, “four years ago, Ghanaian economists thought of how not to let the cedi appreciate, how to make sure that the non oil sectors where also growing, and the cedi was not going to appreciate to make us non competitive. The oil is there, cocoa is there, gold is there, so we don’t have to be too pessimistic about the problems.”
The renowned economist reiterated the need for investors to consider areas that will help address the infrastructure gap with emphasis on the ports.
According to him, currently Ghana’s ports were being used as money collecting facilities instead for trade facilitation, something he said needed serious attention.
“We can look at ports expansion for development to support Ghana as a hub; currently we use our ports largely as money collecting facilities instead of trade facilitation and I think that if we take it serious, we can use it as a gateway to landlocked countries such as Burkina Faso, Mali and Niger,” he said.