Ghana eyes 10% growth in 2010

Friday, 20 November 2009

Ghana's economy, buoyed by investments in the agricultural and oil sectors, is expected to grow by up to 10% in 2010 compared to 6% this year, the finance minister said Wednesday.

The government also hopes to reduce the budget deficit to 3% of GDP from 14.9% at the start of this year, Finance Minister Kwabena Duffuor said.

"The key areas that government will focus on in the medium term is to grow the economy at the rate of 8-10 percent per annum," he said.

The growth was predicated on development in agriculture and expected oil revenue that will flow in during the third quarter of 2010 from the Jubilee oil field, one of the largest discoveries made in the past decade in west Africa.

"We will invest heavily in the agriculture sector and increase domestic revenue generation to achieve the growth target," Kwabena told lawmakers.

"Non-oil real GDP growth is projected at eight percent while the overall budget deficit is to reduce to three percent of GDP, driven by cuts in low priority public spending and the re-allocation of resources to priority areas," he said in his 2010 budget speech.

Shortly after sweeping to office in tightly fought elections in January, President John Atta-Mills's government announced ambitious cuts in state spending aimed at slashing inflation and the deficit.

The rate of inflation has dipped for four consecutive months, to 18% percent in October, from a peak of 20.7% in June, but officials say the 14.5% target by year end would be difficult to achieve.

Kwabena said his goal was to reduce inflation rate to less than 10% in the medium term.

"The tempo of increases in the rate of inflation has eased, and has assumed a downward trend, reaching 18 percent in October," he said.

Ghana plans to hike spending by 22.8%, equivalent to 41.6% of the projected GDP for 2010 in order to relieve the fiscal tightening programme government put in place early this year.

He said Ghana, the world's second biggest cocoa exporter and Africa's second largest gold producer, was better placed than many African countries to weather the negative effects of the global financial meltdown.

"In Ghana, the impact of the global financial crisis has been moderate... the economy has managed to weather the recession relatively well, supported by the favourable market conditions for our gold and cocoa exports." Prices for these commodities have held favourably on the international market this year.

Kwabena warned against building hope that oil would automatically catapult Ghana to prosperity without proper management of the resource, which has been labelled a curse in some countries in the region.

"Simply hoping that the oil and gas resources will bring about prosperity to all could remain a pipe dream.

"Oil and gas resources need to be carefully managed to bring about accelerated growth and development and create opportunities for all," he said.

Government is working "frantically" to make sure it will serve as a catalyst to development in Ghana which hopes to become a middle income country by the year 2020, he said.

Sapa-AFP