Ghana must control spending to boost economy - Makthar Diop

The World Bank Vice President for Africa, Makhtar Diop, has called on government to control spending in order to boost the ailing Ghanaian economy.

He said failure on the part of government to address the high cost of living, arising as a result of fuel increase and high rates on the capital market will greatly impede government’s efforts to boost the economy.

The Bank of Ghana recently announced that government will be borrowing an extra GHC 4 billion to meet its obligations as the provisional end-year fiscal numbers present the economy with a major challenge going forward.

Addressing a cross section of the Ghanaian media during his first official visit to Ghana, Mr. Diop said a clear-cut path of addressing the macro imbalances that are affecting the Ghanaian economy is in line with capitalising on current economic gains.

“There is the need to address the numerous macro-imbalances that are rapidly increasing now in Ghana; as you know the economy of Ghana is generating revenue lower than some percentages of other African countries, that is a great imbalance as expenditure has been growing at a pace which is much faster," he said.

Recently, at its last monetary policy meeting, which left the policy rate unchanged at 15%, the Governor of the Bank of Ghana, Dr Kofi Wampah, said the budget outturn clearly shows there will be a need for fiscal consolidation this year; this the bank says it will achieve by addressing the pressures related to wages and salary settlements, utility and fuel subsidies, and outstanding payments and commitments.

The World Bank Vice President noted that “the type of imbalances that has been created is financing of the domestic market in terms of T-Bills, which are pretty high and this put pressure on interest rates for the rest of the economy and affects the capacity of the productive sector to respond and remain competitive.”

Mr. Diop is a Senegalese national with more than 25 years of development experience; he was previously Country Director for Brazil since 2009 where he managed the World Bank’s largest country program.

Prior to joining the Bank, Diop worked at the International Monetary Fund and served as Minister of Finance of Senegal, and as Chair of the West African Monetary Union (WAEMU) Board of Finance Ministers.