CEPA CENTRE FOR POLICY ANALYSIS
Launch of CEPA’s Latest Flagship Publication Ghana Economic Review and Outlook, 2012 and A Companion Volume: The State of the Ghanaian Economy Marking the First Full Year in the Oil Era”
DATE: Tuesday 29th November 2011 TIME: 9.00 a.m. prompt
Venue: British Council Hall, Liberia Road, Accra
This is the seventeenth edition of CEPA’s annual flagship publication on the state of the Ghanaian economy — “Ghana’s Economic Review and Outlook” — since the maiden edition was first launched in 1996. It offers an in-depth assessment of the macroeconomic policies and outcomes from 2010 to 2011 and the outlook for the near term.
The period under review marks the first full year in the oil era — an important landmark in the economic history of Ghana. Commercial production of oil started in earnest in November 2010. However, it is 2011 that marks the entry by Ghana into the oil era. With that Ghana, for the first time, would now be a player in three key international commodity markets — gold, cocoa, and oil.
The coming into the oil era is a blessing on the economy, in the sense that the core commodity terms of trade — measured by movements in the international prices of cocoa, gold, and oil — will now become benign than before if the prices of all three export commodities rise, since Ghana no longer feels the full adverse impact of oil prices because of its new status as oil producer.
As Ghana takes on the additional role of oil producer, two important tasks emerge. The first is how to effectively absorb the foreign exchange resources in order to address infrastructural deficiencies and institutional weaknesses in the economy. This is what is needed to promote accelerated growth and job creation.
The second task relates to the effective management of the foreign exchange resources in order to avoid the so-called ‘Dutch Disease’. Experiences elsewhere have shown that the discovery of oil does not always come as a blessing to a country. The oil boom can move productive resources — labour, land, and capital — away from the non-oil sector and into the oil sector, thereby causing production declines in the non-oil sector. The foreign exchange earnings from the export of oil could also lead to severe loss in international price competitiveness of goods produced in Ghana. Profits become squeezed, and in some cases production becomes totally unprofitable, causing enterprises to shut down with loss of jobs. Such loss of price competitiveness in international trade in the non-oil sector is the so-called ‘Dutch Disease’. Foreign exchange earnings could also provide the resources to import items that compete with those produced domestically to make up for domestic production shortfalls. In this way, we become oblivious to the incipient collapse of some sectors — low productivity areas in agriculture and manufacturing.
Oil resources could also substitute for concessional loans from development partners. Thus, unless fiscal discipline, in terms of domestic tax revenue mobilization and effective public expenditure management is enhanced, oil revenue would allow the perpetuation of unproductive practices that do not promote accelerated growth and job creation. It is this fiscal discipline, supported by strengthened institutions for good economic management and governance, law and order, and justice that would make the oil a blessing to the Ghanaian people. With that, Ghanaians can have legitimate hope that the oil wealth will be translated into growth, jobs, and development for all.
In addition to assessing developments in the implementation of the annual budget and fiscal operations, the Bank of Ghana’s inflation targeting regime, interest rates, and credit conditions in the banking system, and external trade and payments, this flagship publication provides an appraisal of the financial health of the economy and developments in the domestic bonds market.
Two documents — the Main Report and a companion volume — would be available for sale at the launch at the following prices:
• Ghana Economic Review and Outlook, 2012 — GH¢10.00; and
• Companion Volume: The State of the Ghanaian Economy — GH¢3.00
Copies of these reports and other CEPA publications are available at the following address:
Erasmus Library and Information Resource Unit
Centre for Policy Analysis (CEPA)
No. 4 Prempeh II Street,
Telephone: (0302) 420054/420055/420057/420058
Internet Resources: www.cepa.org.gh