Economy faces bleak future, Minister

Accra (Greater Accra), 27^th October 99

Mr. Moses Asaga, a Deputy Minister of Finance, on Tuesday painted a gloomy picture of Ghana's economy for the last quarter of the year, saying that this situation will spill over into the first quarter of next year.

Mr. Asaga who was giving the 'state of the national economy' at a symposium in Accra, said: "there is the need to do a comprehensive overhauling of the macro-economic set-up to arrive at a pleasant conclusion."

The symposium was organised by "Emerging Leaders for Development (ELD)", an NGO think-tank aimed at bridging the knowledge gap on the economy and developing the skills of people for development.

"Things are not going to be easy in the last quarter of this year and possibly into the first quarter of next year," the minister said.

This, he said, is as a result of the "persistent fall in commodity prices, increasing prices of crude oil and delays in external inflows of foreign direct investment due to the debt relief initiative as well as Ashanti Goldfields Company margin calls".

Mr. Asaga said the government budget targets have, in some instances, been met, and exceeded in others.

Foreign direct investment patterns have not been bright in view of the inability of multilateral donors and partners to meet their financial commitmentsx to the country.

The continuous fall of the Cedi (17.9 per cent since January) was also mentioned as one of the major dents on the economy which is threatening to put it out of gear.

Mr. Asaga said the government stands to lose about 175 billion cedis from the decision to maintain the current producer price of cocoa, while the year 2000 will see a shortfall of more than 400 billion cedis.

He stressed that quick action needs to be taken otherwise it would lead to the fuelling of inflation.

The deputy minister gave an overview of Ghana's transition from the early eighties, saying, "the country has come a long way, but needs to do a lot more to translate it into the desired middle income level status.

"Government also stands to lose about 450 million dollars on the importation of crude oil if current prices do not change. The price of crude oil has risen from 10 dollars in January to about 24 dollars at the end of September.

"It is in this light that we will want to plead with Ghanaians to be moderate in their wage demands", he said.

On what the government intends to do, Mr Asaga said there will be a further reduction in domestic capital expenditure, heightened enforcement of revenue collection procedures, continued negotiation with financiers and donors to earn an enhanced support mechanism".

"The government is also negotiating with the Japanese government to defreeze the 51 million-dollar facility, which the Japanese government had held up because Ghana is listed among the Highly Indebted Poor Countries (HIPC)."

He urged the country's development partners to commit about 600 million dollars to the country".

Concerning the AGC-Lonmin crisis, the deputy minister noted that the government is keenly interested in the fortunes of the company and is negotiating strongly on behalf of AGC.

"AGC is a national asset that must be protected and with lessons learnt from the East Asian crisis, we are poised to make a headway.

" The government has over the period maintained, among other things, a hold back on the possible take-over bid by Lonmin, entered into some cost sharing arrangement with Lonmin over share structuring and hopes that there will be due diligence in the conclusion of the talks".

Mr. Ishmael Yamson, Chairman of UNILEVR Ghana Limited, who gave a lucid analysis of the economy, was not happy that after several years of economic adjustment and the inclusion of foreign direct aid, the country still faces serious micro-economic difficulties.

He called for a clear, redefined, specific and aggressive strategy for promoting the private sector, a strategy, he said, would develop, grow and support the sector.

"In effect, we must leap-frog into bigger and more audacious targets which will raise private investment to 25 per cent of GDP and push Ghana to the top rankings of FDI flows in Africa within 10 years".

He called on the managers of the economy to develop the nerve to plan for the future and said although a lot has been achieved on the macro-level, a lot still remains to be done at the micro level.

He mentioned the lack of a clear focus as the cause of Ghana's failure to provide attractive micro-economic environment, adding "we end up doing everything poorly.

"If we read the government policy documents, you will be amazed by the complete lack of focus in defining initiatives supposed to create a total attractive and conducive environment for the private sector".

Mr. Yamson said the nation should strive to remain competitive by removing impediments and frustrations in the public sector which invariably puts off many a local and foreign investor.

He called on political leaders to be strong, bold, sensitive and focused.

"... A country that accepts the rule of law, and is not corrupt prospers, and all, especially the private sector, takes notice immediately because they know they can do business with such a group.

"And I challenge all the political parties to identify their future leaders now and begin the process of training and developing them in order to make them prepared and aware of the factors that make a good nation," Mr Yamson said.

He stressed that politics should no longer be opportunistic, "neither should it be national service for the sake of making time to sit in parliament.

Politics must be a means of adding value to the lives of the people of Ghana".

GRi