Ghanaian President Gives Maiden State Of The Nation Address

In fulfilment of Article 67 of the Constitution, Ghanaian President Nana Akufo-Addo presented his maiden State of the Nation address to parliament on 21stFebruary, 2017.1 The president painted a gloomy picture of the economy inherited from the erstwhile National Democratic Congress (NDC) government: characterised by estimated real GDP growth of only 3.6% per annum in 2016 – the lowest in 23 years; high fiscal and current account deficits, ballooning public debt, double digit inflation and elevated interest rates.

Economy

Since the restoration of multiparty democracy, election year overspend has been a signature feature of the political cycle with few exceptions. Nevertheless, 2016 slippages stand out on two fronts at least: their quantum and timing.

The budget deficit is estimated to have reached 10.2% of GDP, as against a target of 5.3%; public debt has crept back up to USD27 billion or 74% of GDP, and a forensic audit by the finance ministry has revealed a GHS7 billion (USD1.5 bil.) expenditure gap. This is in the midst of an ongoing IMF programme (a three year Extended Credit Facility aiming at the restoration of macroeconomic stability and public debt sustainability whilst maintaining social spending2. President Akuffo-Addo made reference to the missed IMF targets in his address. But on policy measures, it laid emphasis on plans to reduce tax and interest rates, provide stimulus packages for local industries and ensure adequate power supply. The popular one-district, one-factory policy according to the president will be implemented through Public Private Partnerships (PPP). However, the government has begun negotiations for the extension of the IMF programme from its scheduled April 2018 deadline to December 2018. Between this and the strained fiscal context on the one hand, and the above pledges of government largesse on the other, there may be some tension.Finance Minister Ken Ofori Atta is expected in parliament on March 2 to present the budget and economic policy.

Energy

One key area addressed by Akufo-Addo was the energy sector. As it stands, Ghana has an installed capacity of 3,644MW of which 3,275MW is classed as 'reliable'3. dumsor4 has been reduced in recent months and output is expected to be boosted over the next 12-18 months by (a) the TEN oil and gas field ramping up to full production5 and (b) the Sankofa field producing its first gas in 20186.

Nevertheless, in his address Akufo-Addo bemoaned the debt-addled nature of the...