Ghana's Economic Crisis Seth Terkper touts achievement of gov't economic strategies

Government decided in 2013 after a 12% deficit and a close to 60% debt to GDP ratio  to embark on a home grown policy to reduce government expenditure, reduce the national debt and increase revenues.

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Ghana's Finance Minister, Seth Terkper play

Ghana's Finance Minister, Seth Terkper

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Finance Minister Seth Terkper has been enumerating the successes of government's fiscal consolidationmeasures.

Government decided in 2013, after a 12% deficit and a close to 60% debt to GDP ratio,  to embark on a home- grown policy to reduce government expenditure, reduce the national debt and increase revenues.

In order to achieve this, government adopted the fiscal consolidation drive which saw the removal of fuel subsidies, cut public- sector employment and an  insistence on State Owned Institutions to borrow on their own books.

Three years on, Ghanaians have been wondering if their sacrifices have yielded any results.

Budget Deficit Reduction

In a press briefing Tuesday, Seth Terkper declared the fiscal consolidation measures a success so far, pointing out the " drastically" reduced budget deficit as one of the visible signs of an economic turnaround.

According to Mr. Terkper, " The fiscal consolidation measures have ensured the reduction of  our budget deficit. We had a deficit of nearly 12% in 2013 and that was what we were looking resolve. Now the deficit stands at 7.3%, a clear indication that  fiscal consolidation measures  are being successfu. We are now looking at a target of 4.5% and 5%."

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Single Spine and Payroll Issues

Another measure of success for government's fiscal consolidation measures, according Mr. Terkper, is the Single Spine Pay Structure and Payroll Issues. In 2012 when the Single Spine Pay Policy was implemented,  Ghana's wage bill stood at 65% of total tax revenue, which was a concern to government.

Furthermore, government's inability to migrate all workers onto the scheme at the same time sparked numerous labor strikes and agitations. Today, Mr. Terkper says the labour agitations have reduced drastically, as well as the burden of the wage bill on the budget.

Debt Accumulation Rate

Although, the country's debt currently stands at 48 million Ghana Cedis, Mr Terkper said the rate at which government is accumulating debt has decreased.

" Ghana's debt to GDP before HIPC was over hundred percent. And after HIPC, when the debt reduced totally, we started accumulating debt at an alarming rate, up until 2014 when the rate got alarming. But the good news about our fiscal consolidation measures is that the rate of accumulation has decreased"   Mr. Terkper said in  an interview on  the Citi Breakfast Show Wednesday morning.

When asked if interest payments do not defeat his assertion, Seth Terkper conceded that interest payment  is a problem which is compounded by the country's foreign exchange situation.

" One of the main threats to our debt today, is not the rate of accumulation as I said before, but the foreign exchange rate. The exchange rate is the main reason why we pay more in servicing our debt", he said.

  The Ministry of Finance, under Seth Terkper has been accused of over- emphasising the need to balance the books at the expense of the social wellbeing of citezens. With the guidance of the IMF, in a 960 million- dollar bailout deal, the country is supposed to cut public sector and social expenditure drastically. Ghanaians have to make sacrifices by way of tax hikes and introduction of new taxes. This is why they will pay particular attention to  the successes the  fiscal consolidation attempts are supposedly yielding to the economy and invariably to their lives.

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