Late last week, the Bank of Ghana released its latest summary of economic and financial statistics, covering an array of indicators including those related to government’s finances, the public debt, external sector performance, money market interest rates, exchange rates, major export commodity prices, liquidity, banking Industry assets and liabilities and the performance of the Ghana Stock Exchange among others. These are of vital importance in assessing Ghana’s economic performance over the past one year and its current standing since the central bank’s summary, published every two months is the only regular source of such information. The Ministry of Finance restricts its release of such information to twice a year – once during its annual budget presentation and the other during its annual mid-year review presentation, both of them to Parliament.
To be sure the latest figures released by the BoG last week are in the main impressive. Ghana’s external sector performance has reached a long term high and the fiscal situation while a bit off-target, is generally following the script written by government into the 2019 budget. On the downside though, the data reveals an acceleration in public debt accumulation.
We are looking forward to a more detailed presentation of the latest economic data at the end of the month from the Minister of Finance, Ken Ofori-Atta when he presents his mid-year review of the budget’s implementation to Parliament.
However, we are asking that the data he will present be more accurate and more enlightening than what we were given last week. Sadly, the data we are dealing with currently falls short of optimal on both counts. Here are two simple examples of what we mean.
With regards to accuracy we point to arguably the most fundamental statistic of all – Gross Domestic Product. The BoG’s latest data asserts that GDP for 2018 was GHc300.596 billion and that projected GDP for 2019 is GHc344.455 billion. But we are at a loss to how this can be. Projections for current year GDP used in computing an array of macro-economic ratios derives from previous year GDP plus the added economic value for the current year as contained in government’s economic growth target. For 2019 this is 7.6 percent and added to the 2018 figure this gives a projected year-end GDP of GHc 323.441 billion, a figure therefore supposed to be used as the denominator in all ratios where a figure is given as a percentage of GDP. However, in the BoG’s latest data the projected GDP for 2019 is given as GHc344.455 billion. To achieve this Ghana would have to achieve economic growth of 14.6 percent rather than the 7.6 percent actually being targeted.
This renders all the ratios derived from 2019 GDP projections inaccurate. For instance, based on the lower figure for projected 2019 GDP, the key ratio public debt to GDP would be 61.8 percent rather than the 58.1 percent presented. Conversely, the fiscal deficit figure for first quarter of 2019, at 1.6 percent of GDP should in actual fact be lower. We do not see any gain for government in a deliberate miscalculation of projected GDP – there are as many resultant ratios which detract from actual economic performance indicators as those that make it look better. Rather we see it as a mistake, but one that needs to be corrected before the Ministry of Finance presents its mid-year review shortly.
With regards to completeness we point to the use of computing government’s fiscal deficit on cash basis, but not on commitment basis. The difference between the two reveals any new build up in payment arrears and government itself has repeatedly told us how debilitating this can be, which means any such build ups should be considered in any assessment of Ghana’s economic performance.
So even as we congratulate government and its central bank on the significant improvement in many key performance indicators, we demand that we are given accurate and relevant data with which to assess that performance.
