Ensuring and sustaining macroeconomic stability
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Ensuring and sustaining macroeconomic stability. Response from DPs to the Ghana Shared Growth and Development Agenda 2010-2013. GSGDA’s macro-chapter. We see: Broad policy orientations Little analytical underpinning Little interlinkages between macro-issues and other policies

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Ensuring and sustaining macroeconomic stability

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Ensuring and sustaining macroeconomic stability

Response from DPs to the Ghana Shared Growth and Development Agenda 2010-2013


GSGDA’s macro-chapter

We see:

  • Broad policy orientations

  • Little analytical underpinning

  • Little interlinkages between macro-issues and other policies

    We would expect:

  • Macroeconomic framework that establishes the scope for increased spending on development priorities (fiscal space), by:

    • Getting the basics right (analytical framework + assumptions)

    • Addressing current challenges that constrain development potential

    • in order to understand the viability of development policies in the sectors.


Analytical underpinning needed to establish fiscal space

The macroeconomic framework should guide us to understand:

  • Assumptions on sources of growth and employment

  • Scope for increased revenue collection, domestic (efficiency, coverage) and external

  • Timing and volume of new revenue from oil&gas (leap in GDP may lead to false expectation regarding availability of revenue)

  • Meaningful costing of policy priorities, and translation into the 2011-2013 budget (currently under preparation)

  • Analytical framework after GDP rebasing incl. new financing options


Addressing challenges to create fiscal space for development

  • The following challenges – if not properly addressed – risk to eat up most of the room for development spending:

    • Reduction of fiscal deficit

    • Arrears

    • Expenditure controls

    • Wagebill

    • Financial sector

    • Energy sector

    • Debt sustainability


Linking in with sectoral development

  • Sectoral policy orientations need to be considered against macro-policy, e.g.:

    • Agricultural development (prone to Dutch disease)

    • Access to affordable credit (linked to viability of banking sector, linked to arrears and energy-sector problems)

    • Gas sector development (linked to arrears in energy sector which constrain financial sector)

    • PFM reforms (revenue and expenditure) in view of fiscal deficit but also increased government efficiency


Some issues for discussion and follow up

  • After having established the policy orientations through the GSGDA, how is GoG planning to work out the forward-looking analytics which will determine fiscal space?

  • What comprehensive policy actions to address key constraints?

  • How can we deepen the linkages between macroeconomics and sectoral policy priorities? What role to play for DPs?


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