Extractive resources not enough to reboot economy, time to diversify ACEP says
The Executive Director at the African Centre for Energy Policy (ACEP), Benjamin Boakye has asked government to concentrate more on diversifying the economy and move away from its dependent on extractive resources.
Ghana’s balance of trade is largely dependent on extractive resources with other major exports not yielding much.
He explained that Ghana sought to diversify the economy with oil through the PRMA, however the Ghana has not been successful in diversifying the economy;
“So much of oil money spent on agriculture, yet food import is growing. It requires effective decision making that reduces the negative impact of resource dependency. Quick and transparent decisions in order to build confidence in the sector.”
According to him, the extractive resource exports average about 62% of total exports, a strong relationship exists between the extractive sector exports and overall GDP, correlation between extractive sector and exports is visible
Speaking virtually at ACEP’s forum last Tuesday to discuss the drivers of Ghana’s debt and their implications for the economy, Ben Boakye stated there are constraints and required action for resource dependency; price volatility -introduces the potential to be caught off-guard if no robust plans exist to smoothen impacts, makes it risky to create a resource dependent borrowing appetite, difficulties in managing debt obligations in low price regimes.
The forum was premised on the fact that a deeper understanding of the drivers of the recent public debt build-up would enable stakeholders to fashion a broad-based consensus on resolving the problem.
This was to foster consensus towards providing input into the ongoing engagement with the International Monetary Fund (IMF), given that debt sustainability is expected to dominate any program that would be agreed upon.
To this end, understanding the country’s debt dynamics from a more comprehensive point, considering all claims on government, was fundamental to professing solutions than the narrow confines of central government debt development.
