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ENSURING AND SUSTAINING MACRO-ECONOMIC STABILITY 2010 Consultative Group / Annual Partnership Meeting Venue: La Palm Royal Beach Hotel, Accra Date: 23rd September 2010 - Technical Meeting 1 Overarching Goal for the Medium Term To achieve and sustain macro-economic stability while placing the economy on a path of higher growth, in order to attain middle-income status by 2020 and also to achieve the Millennium Development Goals (MDGs) It also aimed at reducing poverty through a pro-poor, export-led growth strategy based on modernizing agriculture and linking it to industry in an emerging oil and gas economy The Policy Context & Issues • • • • • • • • • • High and unsustainable fiscal deficits Poor expenditure management and revenue administration High inflation and interest rates; Exchange rate instability Low foreign exchange cover Ineffective debt management Weak institutional capacity for fiscal policy management Inability to link resources to outcomes Inefficient management of the wage bill Uneven sectoral growth Key Areas of Policy Focus • Monetary policy management and financial sector reforms • Fiscal policy • International trade & finance • Public sector reforms/modernization • Economic policy management (with the view to addressing employment and earnings) Monetary policy management Aimed at promoting sound and competitive banking and financial system which can support the growth strategy The policy objectives are: Ensure price and exchange rate stability • Intensify competition in the financial system to reduce high interest rate spread and ensure competitive rates • Strengthen the foreign exchange market Deepen the capital markets • Implement schemes to increase long-term savings/funds • Encourage the further development of the market for bonds and other long-term securities Create a more diversified financial sector and improve access to financial service • Introduce discounted tax rate to financial institutions that lead to priority sectors of business such as Agriculture, Industry, service, Micro, Small and Medium Enterprises(MSME’s) • Strengthen the central securities depository system 5 Fiscal policy management Aimed at maintaining fiscal deficits at sustainable levels through more efficient revenue mobilization, efficient expenditure and debt management The policy objectives are: Improve fiscal resource mobilization • Minimize revenue collection leakages • Institute tax reforms with emphasis on domestic taxes, enhancing tax expenditures Improve public expenditure management • Introduce budget law • Continue with treasury management reforms Promote effective debt management • Maintain public debt as sustainable levels • Employ appropriate debt instrument to reduce the market and refinancing risks associated with debt portfolio Institute mechanisms to manage external shocks 6 • Maintain stable reserves International trade management Aimed at emphasizing exports diversification and sustainable levels of foreign reserves through international competitiveness in a well managed exchange rate system The policy objectives are: Improve export competitiveness • Maintain competitive real exchange rates • Improve import/export regime Diversify and increase exports and imports markets • Promote new goods and services • Continue to take full advantage of Preferential Access to markets, such as AGOA, etc Accelerate economic integration with other regional and/or sub regional states • Implement the ECOWAS community development program • Strengthen links between industrial and trade policies 7 Economic Policy Management Aimed at developing, strengthening, monitoring and evaluating economic planning and forecasting to address macroeconomic and structural weaknesses The policy objectives are: Strengthen economic planning and forecasting to ensure complementary development of economic sectors • Monitor and evaluate economic performance to address macroeconomic weaknesses Formulate and Implement sound social policies • Develop and utilise macroeconomic models • Produce research papers for policy analysis and economic decision making Enabling Environment (Soft issues in development) • Values for national development – – – – – – – – – – Respect for time Hard work Dependability Patriotism Honesty Tolerance Volunteerism Spirit of community Productivity enhancement Etc. THE END.