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IEA Economic Review: Time to fix the economy is now- Dr. Assibey

He blamed the situation on government's inability to properly cut expenditure and be more efficient and strategic with the allocation of the country's meagre resources.

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The Institute of Economic Affairs- IEA, Monday, organized a review of the Ghana's economic performance for 2015.

Economist with the University of Ghana department of Economics, Dr. Eric Osei Assibey has described the country's current economic state as dire, chaotic and quickly getting out of hands.

He blamed the situation on government's inability to properly cut expenditure and be more efficient and strategic with the allocation of the country's meagre resources.

Moderating the session at the University of Ghana, Dr. Osei Assibey said

" The stunted economic growth, fiscal deficit, and high inflation are symptomatic of government's poor management of the economy."

He added that;

"The current problem we are facing really is self inflicted. We have caused it. We caused it and we are trying to clean it up. Bad fiscal policy, bad energy policy, and bad debt policy."

Dr. Osei Assibey then emphasized the need for government to tackle the issue head-on in 2016, be  more desciplined and apolitical even in an election year.

"We shouldn't act as ostriches. It is government's own reckless spending in 2012 and the strong appetite to borrow to finance the over expenditure without focusing on innovative domestic resource mobilization is what has brought us this far," he noted.

He said whilst the bad fiscal and bad energy policies are reversible at least in the short term, the bad debt policy may have dire repercussions on generations unborn.

He said the onus now lies on government to be more prudent in the economic management, particularly as the country goes into an election year in 2016.

The IEA described the economic performance from January to June 2015 as generally below expectation.

Dr John Kwakye, a Senior Fellow at the IEA who addressed the review said the economic growth over the period under review "continued to be sluggish and macro economic instability remained heightened."

He was concerned about the country's debt to GDP situation which he said could slide the country back into the highly indebted poor country bracket.

As at June 2015, the country's debt situation stood at 94.5 billion cedis which is 70.9% of GDP, John Kwakye stated but the situation has not changed dramatically as at November 2015.

The Finance Minister Seth Terkper in his 2016 Budget presentation last month quoted the country’s public debt as standing at Ȼ92.2 billion cedis, a figure the IEA believes is still relatively high.

"The debt level has become alarming, given that 60% is broadly considered to be the sustainability threshold for Ghana," Kwakye noted.

The member of the Bank of Ghana Monetary Policy Committee also raised concerns about the interest payments on loans which he said could derail the country's economy even further.

He noted that interest payments on loans are higher than the expenditure on capital investment, a situation, he said had deleterious effects on the country's economy.

He said the government must adhere strictly to the fiscal consolidation path and concentrate more on addressing the fundamentals of the economy.

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