Economist Prof. Eric Osei Assibey has asked the Government to take advantage of Ghana’s recent positive outlook ratings to attract more investments into the country. Prof. Osei Assibey’s comment follows the country’s recent improvement in the report of Moody’s from a stable outlook to a positive one.
International Rating Agency Moody’s based its rating on what it calls a rising confidence in Ghana’s institutions which are expected to lead to stability in revenue and expenditure in the medium term.
These include the recent financial sector reforms taken by the Bank of Ghana, the establishment of the Fiscal Responsibility and Advisory Councils as well as the passage of the Fiscal Stability Act, which proffers sanctions for the Minister of Finance in case the government is unable to meet the budget deficit target of 5 percent or less in any given year.
In an interview with Citi FM, Prof. Assibey, who is a lecturer at the Department of Economics of the University of Ghana, said the upward review of Ghana’s rating was expected. “There are obviously some underlying risks, but on the balance I think that the positives outweighs the negatives though there are risks that we may not be able to achieve many of the things that have been set out within the year. But on the balance I think that it is tilted more to the positive than to the negative,” he noted.
Moody’s however cited some risk factors which could hamper the ability of the government to achieve some of its targets. These bordered on unplanned expenditure especially during election years, and the impact of international developments on prices of commodities like gold and oil.
While admitting the existence of these likely impacts on the Ghanaian economy, Prof. Assibey was optimistic that the government should be able to surmount them to attract investors as it seeks to.
“Some of the risks we could have control over particularly with the political business cycle which requires unwavering political commitment on the part of the government’s fiscal discipline to be able to stay within budget, and to match expenditure with revenue,” he explained.
He added that, “For things like commodity risks like cocoa prices tumbling or crude prices going down or high, there is very little that the government can do, but when they happen the government would have to make sure that they have a good policy response to make sure that it reduces the pass through effect on the economy.”
Credit: citifmonline
