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•GDP
growth rate has reduced for fifth consecutive year to 3.3% in 2016 because of
the tight fiscal and monetary policy adopted by the Bank of Ghana (BoG)

•Parliament
recently approved 5% cap on borrowing from BoG violating the 0% financing condition of
IMF. This led to reduced monetary supply in the economy.

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•The
Government couldn’t achieve its fiscal deficit target and it stood at 8.7% of
GDP due to reduced revenues which in turn was due to reduced economic activity
due to poor sentiment amongst the countrymen.

•Monetary
policy rate stood at 25% in 2016 which made borrowing very difficult. This
again affected GDP due to reduced economic activity.

••Industry
activity was also declining which impacted GDP growth significantly.

•Major
issue was the disruption in oil production which reduced domestic output.

•One
point was the over reliance on service industry. Services contributed 61.1% of
GDP in 2016 which might be dangerous for an economy if that industry faces
recession. Diversifying the sectors can reduce the risk.

•Agriculture
was declining. Its contribution to GDP fell from 26% in 2015 to 20% in 2016.•The
period witnessed GDP growth from 39.57 billion USD to 47.81 billion USD.

•The
policy interest rate increased from 13.5% to 16%.

•Thus
we could conclude that it is the combination of Expansionary Fiscal policy and
Tight Monetary policy where impact is dominated by Expansionary Fiscal Policy.

•The
expansionary fiscal policy was due to increased Government spending due to
grants and investment.•GDP
reduced from 47.81 billion USD to 42.69 billion USD

•Policy
interest rate surged from 16% to 25.5%

•This
is the net effect of Tight Fiscal and Monetary policy where impact is mainly
due to monetary policy

•IMF
intervened and ordered Bank of Ghana not to finance any activity

•Due
to rising debt, the Government postponed few of its investment plans and
reduced its spending.

••Since
last 3 years, the Government has been promising restoration of energy supply
and new hydrocarbon oil wells, but have failed to deliver. So, if this is
achieved Government could improve the oil output which is one of the major
contributor to GDP

•Jubilee
oil and Gas field never runs continuously as it constantly faces some or the
other technical issues. Hence, it’s of utmost importance for the Government to
resolve them.

•The
‘Made in Ghana’ policy announced in 2016 has not yet gained momentum. Policies
are passed but the Government lacks in its implementation. Hence, focus on its
implementation and effective use of National Entrepreneurship and Innovation
Plan (NEIP) which promotes “One District, One Factory” is very important.

•Government
reforms in agriculture sector is must which can increase the output, generate
jobs and thereby GDP.

•BoG has
slowly started financing which is a good move, but the process needs to be
accelerated.

•Due
to negative sentiment, Government needs to affirm that economy is going to
improve in future by improving oil and agriculture infrastructure. Thereafter,
slowly Government could reduce the policy interest rates.

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