The International Monetary Fund (IMF) has warned that Ghana could face revenue shortfalls if the country starts the implementation of the African Continental Free Trade Agreement(CFTA) this year.
The IMF maintains that although the agreement will boost trade on the continent, it will affect earnings and employment opportunities in some sectors of the economy.
“Our policy message is to try to put the necessary of infrastructure or policies to shelter part of the population that will be affected”, Albert Touna Mama, Country Representative for the IMF noted.
The African Continental Free Trade Agreement is to boost trade within Africa by removing trade barriers.
So far, 22 countries including Ghana have ratified the agreement.
The CFTA will amongst other requirements enable countries that are signatory to the agreement access to a market of 1.2 billion people with a combined Gross Domestic Product of 2.5 trillion dollars.
The benefit notwithstanding, the IMF is warning that Ghana lose revenue due to requirements to reduce and scrap some tariffs.
The effect of this, will include the influx of foreign goods on the Ghanaian market with a trickle-down effect on local manufactures.
Speaking at the launch of the IMF’s spring 2019 Regional Economic Outlook, Deputy Trade Minister, Carlos Ahenkorah, said the government has begun working with trade unions in the country to find ways of reducing possible shocks from the agreement.
He stated that “we are bringing GUTA, AGI and the GNCCI just to ensure that we can cushion them against any shock.”
In addition, revenue generated from imports is likely to drop due to the reduction in tariffs on goods brought into Ghana from beneficiary countries.
But Finance Minister, Ken Ofori-Atta who was also the event said alternative measures are being considered to curtail the impact on the country’s fiscal balance.
“The issue of diversification also goes to talk about an outward reach in terms of our production, so we move more into an export-oriented base. If we able to link in positively to the Free Trade Continental Zone, that becomes a 2.5 trillion economy”, he noted.
Overall, the IMF believes that although the Continental Free Trade agreement will boost trade significantly, the move will benefit some industries and hurt others, therefore policymakers must consider structural reforms to improve agricultural productivity and strengthen the competitive advantage of the other economies.
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