Terkper: Govt Conservative About Growth Prospects

The Minister of Finance, Mr Seth Terkper, has said the government has decided to adopt a firm but conservative approach to making macroeconomic assumptions, in spite of the bright economic outlook.
He said with the Tweneboa-Enyera-Ntomme (TEN) fields, the Jubilee fields, as well as the Sankofa field, for which a third FPSO was at an advanced stage of construction, added to the government securing a World Bank partial risk guarantee, growth was expected to expand.
That, he said, was complemented by a growing services sector and improvement in the power situation in particular.
He said for the first time since 2006, Ghana aimed to achieve a primary fiscal balance surplus in the 2016 fiscal year.
No over-excitement.
Mr Terkper, who said this during a press briefing in Accra yesterday, however, added that “going forward, we want to be conservative. We would not want to be over-excited about the TEN fields and Sankofa. We must learn lessons from our first experience when we estimated crude oil lifting at 90,000 barrels but it did not happen on technical grounds and added to the single spine and other problems. So we want to be conservative and when the fortunes become better, we can revise the indicators.”
So far, he said, the government had marshalled strong political will to achieve fiscal consolidation, with wage bill control institutionalised, while arrears were being aggressively cleared.
He said reforms such as programme-based budgeting and monthly budget performance monitoring had led to lower deviations, while the fiscal deficit had been significantly lowered, with near positive primary balance.
That, he said, had culminated in lower new borrowing requirements and a drastic slowing of debt growth, with a focus on debt repayments.
Refinancing loans
Most borrowing activity now, he said, was targeted at refinancing outstanding loans to prolong the period for the servicing of those loans and reduce the cost implications.
He said funds were being collected from the special energy levies to be used to repay debts owed by state-owned enterprises (SOEs).
To that effect, he said, an agreement had been reached with some banks to restructure those debts, while efforts were underway to increase tax revenue.
He said the International Monetary Fund (IMF) programme which extended beyond the election period had led to a high level of political commitment to fiscal prudence with hard choices such as wage bill caps, tariff increases and subsidy elimination.
The government, he said, had initiated clear and focused policy action to drive inclusive growth and plug leakages to improve revenue collection.
Reason for successes
He attributed the successes to the home-grown policy that was adopted, in addition to the Senchi Consensus and the IMF programme which, according to him, provided the key indices for the achievements made so far.
However, he said, inflation was one indicator that had not seen improvement until last month’s inflation.
That, he said, was because the government was still in the process of rationalising the subsidies policy, adding that with a liberalised system and an automatic price adjustment regime being introduced, the system would be sanitised, instead of “just waiting and intervening with subsidies of price”.
Some of the tools that were used, he explained, were corrections, while others were structural.
He said the structural ones were permanent, citing the amendment of the tax law as an example, while temporary taxes were also imposed.
“But the fact that you impose temporary taxes means that when things improve, you must remove those taxes and that is precisely what we are going to do. We don’t intend to keep them.
Writer’s email: victor.kwawukume@graphic.com.gh
The Minister of Finance, Mr Seth Terkper, has said the government has decided to adopt a firm but conservative approach to making macroeconomic assumptions, in spite of the bright economic outlook. He said with the Tweneboa-Enyera-Ntomme (TEN) fields, the Jubilee fields, as well as the Sankofa field, for which a third FPSO was at an advanced stage of construction, added to the government securing a World Bank partial risk guarantee, growth was expected to expand.
That, he said, was complemented by a growing services sector and improvement in the power situation in particular.
He said for the first time since 2006, Ghana aimed to achieve a primary fiscal balance surplus in the 2016 fiscal year.
No over-excitement
Mr Terkper, who said this during a press briefing in Accra yesterday, however, added that “going forward, we want to be conservative. We would not want to be over-excited about the TEN fields and Sankofa. We must learn lessons from our first experience when we estimated crude oil lifting at 90,000 barrels but it did not happen on technical grounds and added to the single spine and other problems. So we want to be conservative and when the fortunes become better, we can revise the indicators.”
So far, he said, the government had marshalled strong political will to achieve fiscal consolidation, with wage bill control institutionalised, while arrears were being aggressively cleared.
He said reforms such as programme-based budgeting and monthly budget performance monitoring had led to lower deviations, while the fiscal deficit had been significantly lowered, with near positive primary balance.
That, he said, had culminated in lower new borrowing requirements and a drastic slowing of debt growth, with a focus on debt repayments.
Refinancing loans
Most borrowing activity now, he said, was targeted at refinancing outstanding loans to prolong the period for the servicing of those loans and reduce the cost implications.
He said funds were being collected from the special energy levies to be used to repay debts owed by state-owned enterprises (SOEs).
To that effect, he said, an agreement had been reached with some banks to restructure those debts, while efforts were underway to increase tax revenue.
He said the International Monetary Fund (IMF) programme which extended beyond the election period had led to a high level of political commitment to fiscal prudence with hard choices such as wage bill caps, tariff increases and subsidy elimination.
The government, he said, had initiated clear and focused policy action to drive inclusive growth and plug leakages to improve revenue collection.
Reason for successes
He attributed the successes to the home-grown policy that was adopted, in addition to the Senchi Consensus and the IMF programme which, according to him, provided the key indices for the achievements made so far.
However, he said, inflation was one indicator that had not seen improvement until last month’s inflation.
That, he said, was because the government was still in the process of rationalising the subsidies policy, adding that with a liberalised system and an automatic price adjustment regime being introduced, the system would be sanitised, instead of “just waiting and intervening with subsidies of price”.
Some of the tools that were used, he explained, were corrections, while others were structural.
He said the structural ones were permanent, citing the amendment of the tax law as an example, while temporary taxes were also imposed.
“But the fact that you impose temporary taxes means that when things improve, you must remove those taxes and that is precisely what we are going to do. We don’t intend to keep them.