Ensuring and sustaining macroeconomic stability

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
We would expect:
• Macroeconomic framework that establishes the scope
for increased spending on development priorities
(fiscal space), by:
– Getting the basics right (analytical framework +
– 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
• 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
• 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
– Access to affordable credit (linked to viability of
banking sector, linked to arrears and energysector 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
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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