Delegates the time has come for you people to vote for Alan Kyerematen as the flagbearer. He is a leader by all standard to make things work for Ghanaians. Alan Kyerematen still remains the best to lead the party for 2016 rather than the twice defeated presidential candidate. In this regard, Im proposing the following recommendations :- 1.As a matter of urgency, a forum for a National Economic Dialogue (NED) must be organised to discuss critical issues relating to the economy in general and the depreciation of the cedi in particular. The forum must be a multi-stakeholder platform involving senior government officials, the private sector, parliamentarians, representatives of political parties, civil society, labour unions, gender advocacy groups, academia and think tanks, development partners and the media. 2.The outcome of the NED and the common positions reached on various issues must form the basis for revising the 2014 Budget, within the limits of administrative, parliamentary and legal considerations. Notwithstanding the outcome of the NED, it is clear that some of the fundamental assumptions underlying the current budget have already been undermined even before the end of the first quarter, such as the exchange rate projections and the increase in VAT. 3.A major diplomatic initiative must be launched to engage multilateral and bilateral donor partners to reschedule Ghana’s debt servicing obligations, including the consideration of debt cancellation on terms and conditions to be agreed. This will significantly reduce the outflow of foreign currency and, thus, enhance the value of the cedi. In embarking on this initiative, there has to be demonstrable and sustained efforts on the part of the government to curb corruption in order to convince partners that any gains arising from such an initiative will not be undermined. 4.A high-powered executive team should be established to negotiate with major multinational companies in Ghana to defer the transfer of investment capital, dividend income and other forms of payment, on a case-by-case basis, taking into consideration their own external obligations and the need to maintain their competitiveness. A special package of incentives should be considered for those companies ready to reinvest part of their profits to enhance local domestic production and generate additional employment, particularly where such investments would involve vertical and horizontal integration to their businesses and promote local value chains. 5.The GoG should issue Cocoa Bonds in cedis that can be purchased by individual Ghanaians, as well as institutional investors, to finance the purchase of cocoa since farmers are paid in local currency. The current practice of Cocoa Board syndicating foreign loans for the purchase of cocoa should be discouraged. This will optimise the net foreign exchange earnings from the export of cocoa and thereby enhance the 6.The BOG should reduce its policy rate to a single digit (preferably below 6 per cent) to reduce the cost of capital and drive business investment and employment creation. This will also reduce the cost of domestic borrowing by government and by extension, the domestic debt by lowering the cost of treasury bills in particular. The BOG policy rate is considered as a benchmark for fixing interest rates by local banks, although other factors such as transaction costs, administrative overheads, risk pricing, profit margin, etc are considered. At current interest rate levels, local businesses will always remain disadvantaged and uncompetitive. Although there may be short-term negative effects of such a bold policy decision, particularly on the level of domestic savings, the overall impact on the economy will be positive. 7.In the medium term, GOG should significantly reduce its dependence on borrowing from local banks to finance domestic expenditure, and introduce other innovative mechanisms for raising domestic revenue. This will, among other things, increase credit and capital available to local investors to expand their businesses. 8.The BOG should review its new directives reinforcing exchange controls, such as placing restrictions on access to Foreign Currency Accounts and Foreign Exchange Accounts. It is business unfriendly, and counterproductive. 9.The BOG with the support of the GOG should have a policy flexibility to inject a significant amount of foreign exchange (not USD 20 million) from its current foreign reserves to support the cedi. The policy of maintaining foreign reserves equivalent to three months of import cover when the cedi is crumbling leaves much to be desired. 10. The GOG should aggressively promote interventions that will enhance domestic industrial production, such as the District Industrialisation Programme (one district one factory), introduced under the past NPP administration, not only to create employment but also reduce over reliance on imported finished products, and thereby save scarce foreign exchange. 11. Over the last hundred years, Ghana has depended almost exclusively on cocoa and gold for over 80 per cent of its export earnings until the discovery of oil under the NPP government in 2007. The GOG should identify and promote new pillars of economic growth that will diversify the export base, and lead the structural transformation of Ghana’s economy. In this regard, strategic interventions for export development undertaken as part of the Presidential Special Initiatives on Textiles and Garments, oil palm, industrial starch from cassava and industrial salt should be actively supported under public private partnership arrangements. 12. The GOG should significantly reduce its budget deficit by comprehensively reforming the tax structure to expand the domestic revenue base, not through the imposition of taxes and levies that increase the cost of production, but rather taxes on properties and incomes with a social protection cover for low income earners. In addition, GOG must adopt expenditure switching options that will reduce government recurrent expenditure and expenditure on non productive economic activities that do not generate direct revenue for the state. The primary goal underpinning all the proposals outlined above is to expand the productive sectors of the economy by facilitating business and supporting the private sector, maintain fiscal discipline, enhance the inflow of foreign currency and reduce outflows. It is the consolidation of policy interventions that will contribute substantively to the stabilization of the cedi The practical man
Posted on: Sun, 17 Aug 2014 03:55:15 +0000
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