This report is the most recent in aseries aimed at monitoring economic developments in Ghanaand has two sections. The first section summarizes therecent macroeconomic developments in the country while thesecond section presents the main findings on poverty andemployment published recently by the Ghana statisticalservice. Ghana s overall macroeconomic conditions havedeteriorated further in 2014 with large twin-deficitslingering, fueling government debt and inflation, a sharpdepreciation of its currency, and a weaker pace of economicgrowth. The fiscal deficit remains the biggest source ofvulnerability in the Ghanaian economy. Preliminary figuresshow the fiscal deficit was 9.2 percent of GDP in the firsthalf of 2014, driven by the high wage bill and risinginterest costs. The wage bill grew 25.7 percent (y-o-y)during the first half of 2014 despite promised measures tocontain it, while interest payments reached 5% of GDP. Totaldomestic revenue collections were dragged down by acontraction in non-tax revenue while tax revenue onlyincreased slightly to 15.6 percent of GDP. With largeexpenditures planned for the second half of the year, thedeficit is projected to be around 10% of GDP, above thegovernment s 8.8 percent target for 2014. A careful analysisof the determinants of poverty and inequality, and theirinteraction with labor market variables is just beginning,as the 2013 surveys were just released. However, thesepreliminary findings highlight how critical are Ghana spolicy decisions over the next 12 months to pursue moreinclusive and stable growth. Urgent efforts are needed tobuild a more predictable policy environment that facilitatesdiversification from capital intensive activities inextractive industries towards more labor and land intensiveactivities in the agriculture and service sectors.
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