Ghana still has weak economic fundamentals - Grant

Ghana's weak economic fundamentals have been described as a major source of concern that will hinder the accelerated development of the country, notwithstanding current strides of government.

"The continued over reliance on cocoa, timber and gold as the main major revenue source for a large part of the nation's development, cannot in a significant way cause any fundamental change," Mr Yoofi Grant, Executive Director of Databank Ghana Limited said in an interview with the Ghana News Agency (GNA) Business Desk in Accra.

Mr Grant was commenting on the performance of the economy in 2002, prospects and changes that must be effected so that the economy do not only grows, but the growth is sustained.

He described the performance of government over the period as an improvement, saying the microeconomics indicators show that government has made some headway.

"The stability of the Ghanaian economy, until the last quarter of 2002, is worthy of mention, in that interest rates are down to 26 per cent, inflation is also down to 12.8 per cent from a high of 42 per cent in 2000. The cedi depreciated by 49 per cent in 2000, five per cent in 2001 and in 2002 fixed at 12.4 per cent.

Mr Grant said the adoption of the Highly Indebted Poor Country's (HIPC) Initiative has given government big relief especially in addressing the external debt situation. "All these are very positive developments that must be sustained."

He said arguments by Ghanaians that so-called gains listed by government does not translate into money in their pockets, "is preposterous," adding that, "one should not expect that such drastic changes could occur so fast, just over two years, though this is measured against campaign promises."

"It will be na?ve to expect that election promises could be fulfilled just over two years," Mr Grant stressed.

Asked if inflation figures, interest rates and other economic indices reflect the situation on the ground, he said: "the figures are very real. I don't think anyone should think otherwise considering what factors goes into the food basket to form the Consumer Price Index (CPI)."

Mr Grant sounded upbeat about government's performance noting that the reduction in interest rates is a good thing for the development of the private sector.

"This will no doubt reduce the cost of doing business in Ghana." On the challenges facing government, Mr Grant said the coming year will be most difficult for the government.

"It is a period when they have to take decisive action on pertinent issues including clearing the 3.4 trillion cedis debt of Tema Oil Refinery (TOR), alleviating the suffering of the masses, reducing and keeping inflation to a single digit, provide a reliable mass transportation system and ensure that Ghana becomes the most desired investment destination."

He welcomed the move by government to introduce the Presidential Special Initiatives (PSI) that will steadily diversify the nation's exports.

Commenting on the fate of agriculture and industry in Ghana, Mr Grant said agriculture had been overrated as a major source of seeking funds to balance payment difficulties.

"We (Ghana) must increase our effort at maximizing our potential and strength in areas such as the services, where we are best suited and have the competitive edge.

"When we concentrate on agriculture, for instance on rice production, we would be outclassed by countries such as Thailand, Malaysia, China and a host of Asian nations who have a competitive advantage and efficient structures that we do not only have but do not have the means immediately to acquire.

"I doubt if Ghana can be a competitive participant in the international market when it comes to agricultural produce. We should look at meeting local demand for import substitution. What we must first aim at is translating our research programmes in agriculture into economic advantages."

Mr Grant asked government to work quickly at improving the country's Investment Code, saying, " Adequate infrastructure must be put in place to ensure that the right amounts of investment pours into the economy."