7 Economic Indicators that should be watched closely in next 5 years; 1. The cost of debt is rising- our interest bill is now at almost 1 trillion ( higher that health bughet) 2. The growth of private sector credit is skewed to tradables as opposed to productive sectors. the largest share of credit goes to mortgages, trade and personal loans. 3. Low tax base . Our tax to GDP remains at only 13%. Lower than regional standards. eg our VAT is 18% but analysis shows that 15% of the VATable volume is paid. where is the 3% loss? GoU is carrying out a VAT gap analysis. In any countries, it is the biggest 10% that pay the biggest tax- are our big guys paying commensurately? 4. Oour current account remains in deficit over 10% of GDp meaning we demand more forex to import than forex we get from exports. this ofcourse has an impact on exvhange rate volatility as well accumulation of reserves. our forex reserves which stand at 4.5 months of import valuie or 3.3bn dollars fetch interest of now between 0-1% which has led to central bank making operational losses this last year. The current account not likely to ease in coming few years due to oil investment imports. 5. Given our small base of GDP, the economy should aim at growing are more than than the growth potential of 7%. growing at 5% is not good enough. Investment in infrastucture is critical to open the up growth prospects 6. The cost of corruption as cost of doing business is to high. The Auditor general estimates about 700bn to have been lost in FY 2011/12. 700bn over the budget 10 trillion is about 7%. 7. Fiscal discipline or Budget credibility is another point. supplementary budgets among others
Posted on: Mon, 08 Jul 2013 07:16:43 +0000
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