While some economists and statisticians are not happy with the level of growth within the various economic sectors, others think otherwise. At the launch of the mid-year review of the economy by the Centre for Policy Analysis (CEPA), Dr Joseph Abbey, Executive Director of the centre, stated that more needed to be done to stimulate growth and development within the economy. He said lowering inflation, stabilising the cedi against the major international currencies and reducing the fiscal deficits were not enough to generate the needed job creation and growth. He said "pursuing a stabilisation policy without giving explicit consideration to economic growth and job creation would not enhance the developments the country is pursuing." In 2009, the government entered into an agreement with the International Monetary Fund (IMF) and the World Bank for a comprehensive stabilisation programme over a three-year period beginning from 2009 to 2012. STABILISATION PROGRAMME The rationale for the stabilisation programme was that the highly budgetary stance over the preceding three-year period spanning 2006 to 2009 and, in particular, in election-year 2008, led to macroeconomic instability and, therefore, the need for fiscal consolidation. This meant, therefore, that the reduction in the budget deficit should become the macroeconomic priority of the government. But for Dr Abbey and his team at CEPA, pursuing such a policy without putting in the needed structures to enhance growth would be dangerous. The growth target of the government is between seven and eight percent in the medium-term, average inflation of less than 10 percent, gross international reserves of not less than three months of input cover for goods and services and overall budget deficit of about three percent of Gross Domestic Product (GDP). These, according to the government, would be based on prudent debt management to ensure sustainable public debt levels. But Dr Abbey stated that the fiscal effort of the government remained ambitious, especially in the context of net clearance of arrears on account or short-term inflexibilities in public expenditures by way of mandatory, statutory and contractual obligations. He declared "inadequate attention paid to these inflexibilities could lead to under provisioning in the budget which could lead to new payment arrears or worse still in delays and stoppages on infrastructural projects which was counter-productive because of the consequences for growth and job creation". The Trade Union Congress in its submission to government wants the 2011 budget to focus more towards the creation and generation of jobs for the large army of unemployed people in the country. The union is worried about the unemployment figures in the country and has recommended to the government to move away from the inflation targeting policy to that of employment targeting. The Union holds the view that the employment challenge was becoming more daunting, especially as it says "government continued to implement a policy of net hiring freeze in the public sector. The TUC observed that the informal sector was expanding with jobs of very low quality in terms of earnings, job security and social protection. For Dr Abbey, the quest for growth in the country depended on micro-structural reforms with focus on productivity, technical progress and efficiency in public spending coupled with a prudent macroeconomic policy. MONETARY AND FISCAL POLICIES Dr Abbey agreed with the Bank of Ghana's Monetary Policy Committee report that the level of economic activity was low and that had negatively impacted on the revenue figures of the government. According to the MPC report dated September 24 "on growth, the committee noted that the economy was currently operating below its potential. Current developments in the Bank of Ghana's Composite Index of Economic Activity point to weak conditions. The sluggish pace in economic activity has implications for economic growth in the non-oil sector in 2010. The anticipated slow growth' in the GDP in 2010, emanating from signals in the CIEA implies that the process of fiscal consolidation may be delayed as tax revenue targets may not be achieved". Available figures by CEPA indicated that apart from the Internal Revenue Service (IRS) the other revenue agencies are likely to miss their targets and that the projected over-performance by the IRS will however, not be enough to make up for the shortfall by CEPS and VAT. But a Deputy Minister of Finance and Economic Planning, Mr Seth Terkpeh, has denied that assertion, and pointed to the fact that it was only the Customs, Excise and Preventive Service, which was recording low returns, which was primarily due to lower than expected customs duties. That shortfall, the deputy finance minister said, was due to abuses within customs exemption which was being addressed, and that meant that the shortfall could even not be generalized either to all the revenue units or within one unit. A recent IMF country assessment mission to Ghana registered it was not impressed by the rate at which the Ghanaian economy was growing. Although the fund praised the government for its handling of the economy and has also predicted a stronger growth rate this year, it says a lot more could be done in areas such as poverty reduction and borrowing. The delegation asked managers of the economy to strive to reduce the fiscal deficit associated with public borrowing, to sustain and build on the favourable trends in inflation and macroeconomic stability. The leader of the Mission, Mr Peter Allum said borrowing is not a precursor to building a bigger economy. "Ghana seems to be a better place than it was 10 years ago but obviously it is not growing fast enough, poverty is still too high," he said. But the World Bank Country Office in Ghana sees things differently. Briefing the media in July this year, Mr Ishac Diwan, the Country Director of the World Bank, said Ghana was managing its economy prudently, hence the continued injection of donor funds. Mr Diwan said the Board of Directors in June this year approved US$728.7 million for various programmes and projects because of the prudent and successful management of the economy. Already Ghana's economy, he said, was benefiting from US$1.113 billion approved by the World Bank to support her development efforts within the last 12 months. From an independent position, Ecobank Research in its publication dated October 20, 2010 the medium term outlook for Ghana's economy remains reasonably attractive with a proviso that the government avoids heavy borrowing against future petro-dollars for projects that will be executed largely by foreign companies and in the process leaving the country with unsustainable debt. The document pointed out that the implementation at the Single Spine Salary Scheme (SSSS) and its expected impact on government spending could pose a liquidity risk to the economy in the next six months. It stated that the rigidity of the banking sector in lowering rates as inflation and policy rates fall, was also of great concern to the banking sector. In addition, the document pointed out that as margins dropped, banks would focus on big ticket transactions in oil and cocoa sectors thereby starving the small and medium scale sector of credit for expansion in the first half of 2011. Another concern that has been raised in business circles is that of the Dutch Disease when the production of oil comes on stream. Source: Graphic Business