Gov’t wants ‘five percent and above’ growth over NDP12
The Finance Ministry is targeting a growth rate of five percent and above over the National Development Plan (NDP) 12 period, which kicks off next April, even as its forecasts indicate average growth rates of between four and 4.2 percent over the period, BusinessWeek has established.
NDP12 will run until March 2029 and represents a crucial period for fiscal consolidation and acceleration of the country’s structural goals such as economic diversification and digital transformation as well as socio-economic aspirations around employment creation and inclusion.
According to Finance Ministry officials, the NDP12 growth target is in line with the country’s longterm vision of attaining high-income status by the end of 2036. The upcoming planning period is the second of the three NDPs that fall under Vision 2036, the transformational agenda government hopes will deliver an “export-led economy underpinned by diversified, inclusive, and sustainable growth”.
“To reach this target, the economy will have to register annual growth rates averaging over five percent until the end of 2036, including the entire NDP12 period,” ministry officials said in written responses to BusinessWeek enquiries.
“With growth projected to average between four and 4.2 percent through the NDP12 period, this is low and as such is not sufficient to create job opportunities and attain high-income status by 2036.”
NDP11, which ran from April 2017 and is due to end on March 31 next year, projected 4.4 percent growth under its base case scenario. While the economy’s performance in the first half of the period was roughly in line with the projections, the second half saw COVID-19 cause the steepest contraction since Independence, followed by a strong rebound last year, which skewed the averages for the period. Thus far, growth under NDP11 has averaged 2.8 percent, a figure that excludes this year’s economic performance, the last under the planning period.
Finance Ministry officials said the pandemic had also knocked the government’s confidence in attaining average growth rates of five percent and above for NDP12 and through to the end of 2036.
“While this looked possible to attain before the outbreak of COVID-19, the recent economic developments provide a challenging environment to obtain this growth target,” the officials told BusinessWeek. The technocrats said several interventions were in place to help close the gap between the expected growth during NDP12 and the targets of five percent and above.
“Government recognises the need to fast track efficient delivery of public service reforms, digital transformation and other structural reforms,” the officials said.
“This will provide a conducive business environment for the private sector to thrive, ultimately resulting in an improved non-mining sector performance.
“Combined with a robust mining sector performance, this should help the country reach its growth target of at least five percent, intended to drive the country into high-income status.” Part of the interventions towards boosting the private sector’s performance includes government’s plan to open up the development budget to private capital. In July, the Finance Ministry held a funders’ conference where it unveiled its Public Private Partnership (PPP) projects to run under NDP12.
Besides reducing government’s direct expenditure on public infrastructure and allowing it to refocus its priorities, PPPs are expected to enhance the efficiency of both project development and operation, challenges that have haunted nearly every major state-sponsored project over the decades.