IFS urges Finance Ministry; Central Bank to reconcile GDP figures

Accra, The Institute of Fiscal Studies, Tuesday, urged the Ministry of Finance and Bank of Ghana (BoG) to urgently reconcile the differences in Gross Domestic Product (GDP) figures reported by their outfits because it could confuse the International Community.

Finance Minister Ken Ofori-Atta reported to parliament during the 2017 mid-year budget review that Ghana’s debt-to-GDP ratio was expected to be around 71 per cent by the end of the year.

But, Dr John Kwakye, Director of Research at the Institute of Fiscal Studies (IFS) told journalists that the Minister’s figure of 70.9 per cent differed from the 62.5 per cent published by the Central Bank.

He said the GDP formula used by the Finance Ministry was uncertain and called on the two state institutions to take action to reconcile the figures.

The difference appears to be the result of the use of different measures of GDP to divide the nominal debt, he said, in his presentation of the IFS’ comments on the Mid-year Review of the 2017 Budget Statement and Fiscal Policy of the Government, at a media conference.

It is known that Bank of Ghana used the GDP projection for the year; however, the GDP figure used by the Minister is not certain, he said.

It is important to reconcile the figures so as to avoid confusing international investors and markets.

The Minister of Finance presented the 2017 Mid-Year Budget and Fiscal Policy Review to Parliament on July 31.

Before the review, IFS issued an assessment of the performance of the economy and the budget and made an array of recommendations to address shortcomings that it had identified.

The IFS said most of the data available at the time was up to April, however, the Minister provided updated data in his review, in most cases, up to June, which prompted the Institute to critically re-examine its previous position.

The Institute’s latest observation, Dr Kwakye said, was that the performance of the macro-economy was mixed, with broad stability achieved in most key indicators; whereas economic growth, especially, of the non-oil sector, had been disappointing.

The severe shortfall in revenue that occurred through April has been extended through June, forcing further drastic reduction in expenditure, including in critical areas, as government has adhered to a strict deficit target, Dr Kwakye said.

The fiscal retrenchment will have a continuing dampening effect on economic growth, he added.

He, therefore, called for strong efforts by the managers of the economy to institute robust income mobilisation measures to raise more revenue so as to avoid further cuts in expenditure that would have disastrous effects on the national economy.

Source: Ghana News Agency