The Executive secretary of the Centre for Policy Analysis (CEPA), Dr Joe Abbey, has stated that the medium-term prospects of the economy are bright, but there are short-term challenges as well.

He said as the country assumed the new position of oil producer and middle-income status. It should learn to effectively deal with the related pressure from the citizens to increase expenditures in order to overcome infrastructural deficiencies and institutional weaknesses, as well as improve economic well being.

Speaking in Accra at the launch of a publication by CEPA titled “The Dawn of the Oil Era,” Dr Abbey said how these pressures were managed could have significant implications for economic stability, job creation, the concessionality of external loans and the governance issues associated with the “natural resource curse.”

He said these implications warranted special attention and that CEPA offered insights into the challenges at hand and provided some suggestions for addressing them in their publication.

Dr Abbey said in addition to assessing developments in the various sectors of the economy, the publication provided an intuitive appraisal of the financial health of the economy the country both against the background of the high non-performing loans in the banking system and the important evolving lessons from the global financial crisis and its consequences of world recession.

He said a number of suggestions and guidelines had also been advanced in the publication for setting budget deficit targets, making realistic provisions for key expenditure items such as the public sector wage bill and government financed development budget.

Dr Abbey said the publication also dealt with the informal domestic public debt problem.

He said it was important that increases in the policy rate of the Bank of Ghana that might become necessary as a response to high oil price increases in international markets did not result in automatic increases in the lending rates of the Commercial Banks.

Source: Daily Graphic

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