Former Finance Chief, Seth Terkper, has expressed skepticism about the value of the economy growing to GH¢1 trillion by 2024.
The value of the economy in real terms, he noted during a Media Dialogue on the 2024 Budget Statement on Thursday, would be lower than the projected GH¢1 trillion value.
Admittedly, the Former Finance Chief noted there was some growth recorded in the value of the GDP boosted mainly by recent crude oil prices in the global economy, but however, noted that inflation had also contributed to the increase in the country’s GDP.
“The projected GH¢1 trillion GDP value should be adjusted against inflation to find the value in real terms,” he stated.
“It is a positive thing to grow the economy, but it has to be in a very genuine way,” he added.
Ghana’s gross domestic product (GDP) is projected to cross the GH¢1 trillion mark in 2024.
The projection is according to the Finance Minister, Ken Ofori-Atta. In percentage terms, the nominal growth represents a 355% growth in GDP over the past seven years.
Per data on the BoG website, Ghana’s GDP at current prices at end-2022 stood at GH¢610bn.
GDP is a measure of the value of the total production of a country in a given year. Normally, the value of the GDP is influenced by the country’s inflation rate (prevailing prices of goods and services).
For a country such as Ghana, the rapid exchange rate depreciation and high inflation are accountable for the enormous growth in the GDP value.
According to Economist and Political Risk Analyst, Dr. Theophilus Acheampong in a recent tweet, “A 1 trillion Ghana cedi economy means nothing when inflation is still in excess of 30%. It’s actually just $83bn at current exchange rate of USD1 to GH¢12.
“The Finance Minister should rather be talking about Gross National Income (total GNI or per capita or growth rate) as one of the better macro indicators of our economic prosperity. I get worried when we ‘abuse’ such indicators in the name of grandstanding. ”
Speaking further during the Media Dialogue, Mr Terkper noted that granted the GDP value was growing to a trillion cedis in value, the country’s tax revenue performance is sluggish and emphasized the need for reforms in the country’s domestic revenue mobilization efforts in order to generate the required tax revenues to support Government expenditures under a GH¢1 trillion value economy.
“But you can see that if we are going to hit GH¢1 trillion value, then our tax revenue performance is sluggish and if we don’t make reforms in that area, we will not be able to generate enough revenue to support the expenditure needed for a growing economy,” he added.