Non-oil sector growth expected to remain high – World Bank | Economy

THE WORLD The World Bank has announced that growth in Ghana's non-oil sector is expected to remain high at 6.2 percent, with policy interventions in agriculture and industry revitalizing the productive sectors.
The interventions, he said, would be important for diversifying the economy and generating broader sustainable economic growth in the medium and long term.

But to facilitate the transition to a more diversified economy, he said: "It was necessary to invest the current wealth of Ghana's natural resources in the non-natural resource sectors for sustainable growth in the medium and long term" . that "the government needs to improve the competitiveness of the economy for private-led investment in the non-oil sector for growth".

Without this, he warned, "total factor productivity should remain stagnant or decline slightly in the medium term". The World Bank reported on this in its fourth Ghana Economic Report in its June 2019 report. "In addressing the macroeconomic outlook and the challenges of economic policy, he said that" economic growth should be stronger in 2019; but in the medium term, a more diversified economy is imperative. "

"Growth is expected to reach 7.6 percent in 2019, driven by the oil and non-oil sectors," he said.

Slow fiscal consolidation

The World Bank has indicated that fiscal consolidation is expected to slow down in 2019, but that overall direction is expected to remain unchanged in the medium term.

Revenue mobilization

However, he insisted that "the mobilization of national revenues is an imperative".

The overall fiscal deficit in 2019, excluding the costs of cleaning up the financial sector (which are expected to be around 1.6% of GDP), is expected to be 4.0% of GDP and 4%, 5% of GDP in 2021, "revealed the government. He added that the deficit, including the expected cleanup costs, would reach 5.6 percent in 2019. "An effective strategy for domestic resource mobilization is an urgent imperative for the government as spending cuts, including in response to income underperformance may not be sustainable. "

Any new tax measure should be examined in relation to its social and economic objectives in order to allow the prioritization of the tax system, she urged.

Financial viability test

With regard to excessive spending in the normal election year, the World Bank has made it clear that "the next election cycle in 2020 will be an important test of fiscal sustainability". Ghana's fiscal and debt dynamics could be negatively affected by fiscal slippages: underperformance of revenues and higher election-related expenditures ahead of the 2020 elections; other negative developments in the already vulnerable financial sector, despite the interventions of 2018; and unfavorable external financing conditions. "

On the other hand, the adoption of the law on fiscal responsibility and the creation of the Budget Council in December 2018, together with a statutory ceiling of 5% for the budget deficit, made it possible to overcome the legacy left by the electoral cycle. budget slippages in 2020.

"As the next elections enter a phase of expansion, the economy does not need additional fiscal stimulus," he said.

Treat vulnerabilities

According to the World Bank, there is an urgent need to address the vulnerabilities of the financial sector and would require additional efforts in 2019 and in the medium term.