The World Bank says the continuous dependence on aid by developing countries especially Ghana will not lead to economic growth and therefore there was the need for the country to diversify its economy in order to raise more revenue to meet its expenditure.
Over the last decades, the nation had been highly dependent on aid from donor countries and the two Bretton Wood institutions, the World Bank and the International Monetary Fund (IMF) – but the previous New Patriotic Party (NPP) government weaned itself of the IMF and went onto the international capital market to raise sovereign bonds for infrastructural projects which was highly subscribed.
However, with the high fiscal deficit recorded in 2008, the new administration had no option but to return to the IMF to borrow money to help improve the fiscal state of the country.
Dr Ngozi Okonjo-Iweala, Managing Director of the World Bank Group, in an interaction with some journalists at the end of her three-day working visit to Ghana last week, said the country should do more to raise revenue from luxury items so as to bridge the gap between spending and revenue mobilization.
According to her, though the country had over the last few months done well to realise a stable macro-economic environment, there was the need for more to be done for the country to improve the fiscal space. The Government targeted a fiscal deficit of 10.4 percent of Gross Domestic Product (GDP) for 2009 after the budget deficit had reached a high of 14.9 percent of GDP in 2008; but it only managed to achieve about 11.6 percent of GDP.
The World Bank Group MD called for exploration of other sectors such as the agricultural sector where only 44 percent of land was used for agriculture with only 11 percent of farmers using improved seeds since the socio-economic development was underutilized.
“In the area of horticulture, Ghana exports only $100 million, but it can do about $300 million. We need to develop infrastructure, improve irrigation and add value to agriculture to create more jobs for the people.
“The issue is to diversify the Ghanaian economy and not focus too much on oil and gas since they are non-renewable products. We have the means here to develop the services, manufacturing and industrial sectors,” she stressed.
On how to manage the oil resources and revenue well, she called for transparency, accountability, human resource development and use of local content in the oil and gas industry since it was key in managing the resources for development.
“The resources should be managed as a catalyst to development. This is a country that can develop.”
Regarding the accessibility of the $450 million from the World Bank by Government, she noted that Government would have to meet certain requirements before the Bank would give out the money.
Meanwhile, the World Bank has stated that it would commit GH¢450 million at zero interest, with repayment period of 30 years to Ghana but it has to meet certain basic requirements.
According to Isaac Diwan, Country Director, World Bank, his outfit has initiated some pro9jects such as water improvement, capacity building in oil and gas and irrigation at Afram Plains, among others. She expressed concern about the huge difference between lending and deposit rates, hoping in the future the situation would improve. In Ghana, interests on lending rates are three or four times higher than deposit rates.
Source: Business Guide/Ghana
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