Tax revenues exceeds budget projections by ¢301.7billion
Over 720 billion cedis allocated to enhance governance
Three trunk roads to be reconstructed
Finance Minister meets Economic team on 2002 budget
Senior Minister speaks on HIPC
Accra (Greater Accra) 21 February 2002 - Finance Minister Yaw Osafo-Maafo on Thursday announced that tax revenues in 2001 exceeded the budget projections of ¢6,255.2 billion by ¢301.7 billion, because of yield from value added taxes and import duties.
Direct tax collections by the IRS recorded ¢2,123.7 billion, compared to the budget projection of ¢2,246.2 billion Mr Osafo-Maafo said in a budget statement he presented to Parliament on Thursday.
He said Value Added Tax yielded ¢1,964.1 billion against a target of ¢1,744.7 billion, showing a higher performance of 12.6 per cent. Petroleum taxes were ¢646.6 billion, showing a shortfall of ¢29.7 billion while import duties yielded ¢1,268.5 billion exceeding the budget projection of ¢1,086.2 billion by 16.8 per cent.
The Finance Minister said receipts from cocoa export duty amounted to ¢300.0 billion, against the projection of ¢255.1 billion, while the non-tax-revenue of ¢347.7 billion was marginally below the budget target of ¢350.0 billion.
Project grant and loans fell short of expectations. The inflows for loans and grants were ¢1,113.8 billion and ¢511.0 billion, against the targets of ¢2,247.0 billion and ¢707.3 billion respectively.
Programme loans and grant inflows also recorded ¢1,055.6 billion and ¢1,059.0 billion, respectively. These compare with the respective targets of ¢1,224.9 billion and ¢707.3 billion. Mr Osafo-Maafo said the increase in programme grants reflects an increased confidence by our development partners in our economic and financial policies.
Divestiture receipts were ¢154.4 billion, against a target of ¢391.2 billion. The divestiture programme was stalled to allow for stock taking and auditing of the activities of the Divestiture Implementation Committee. This explains the less-than-projected divestiture proceeds.
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Accra (Greater Accra) 21 February 2002 - Provisional outturn for 2001 indicates that overall fiscal balance was a deficit of 4.4 per cent of GDP.
This shows a better performance than the target deficit of 9.0 per cent of GDP and a deficit of 8.5 per cent in 2000, the Minister of Finance, Mr Yaw Osafo-Maafo, said on Thursday.
Presenting the budget for 2002 to Parliament he said the fiscal balance reflected total revenue and grants of ¢8,476.8 billion and total expenditure of ¢9,697.5 billion.
Domestic primary balance showed a surplus of ¢1,639.0 billion, equivalent to 4.7 per cent of GDP. This also showed a better performance than the programmed balance of ¢1,368.3 billion, equivalent to 3.6 per cent of GDP, and the 2000 outturn of 2.4 per cent of GDP.
Mr Osafo-Maafo said the high primary balance of 4.7 per cent of GDP was on account of estimated items in transit totalling ¢243.8 billion, equivalent to 0.6 per cent of GDP.
"This float emanated from releases that were effected in December 2001, but which had not been debited to government account as at the time of reporting. "For the sake of transparency, we have decided to include them in our expenditure report, since the funds have already been committed for those expenditure items.
"In effect, if the items in transit are taken into account, the domestic primary balance was 4.1 per cent of GDP." Mr Osafo-Maafo said the exchange rate of the cedi was stable in both nominal and real terms against almost all the major currencies in the inter-bank and the forex bureaux markets. "This was in contrast with the developments in 2000 when the cedi depreciated sharply and continuously against the major currencies," he said.
He said on the inter-bank market, the cedi to the US dollar exchange rate increased from ¢7,049.73 at the end of December 2000 to ¢7,312.24 at the end of December 2001, indicating a depreciation of only 3.7 per cent for the year. This was far lower than the depreciation of 49.5 per cent recorded for the corresponding period of 2000.
On the forex bureaux market, the cedi to the US dollar rate increased from ¢6,800.00 at the end of December 2000 to ¢7,322.73 at the end of December 2001, indicating a depreciation of 7.7 per cent.
He said this was much lower than the 49.8 per cent recorded for the corresponding period of 2000. Mr Osafo-Maafo said the reasons for the stability of the cedi exchange rate included the increased confidence of Ghanaians in the prudent financial policies of the government.
"Indeed the stabilisation has been achieved on the fiscal side by strictly limiting the government's borrowing requirements and on the monetary side by shifting its financing from bank to non-bank sources through co-ordinated open market operations."
The Minister said non-bank holdings of the government Treasury Bills increased from 37.4 per cent of total holdings at the end of December 2000 to 47.5 per cent by the end of December 2001.
In addition, the reduced demand for foreign exchange to service debts as a result of Ghana's HIPC declaration, as well as lower the government spending and money supply growth were contributory factors to the observed stability of the cedi exchange rate.
Mr Osafo-Maafo said the functioning of the foreign exchange market had improved markedly as monetary discipline had been restored and macroeconomic performance strengthened.
"The Bank of Ghana has maintained a policy of non-intervention in the exchange market and has made no foreign exchange sales to the market other than those for oil imports, allowing the exchange rate to be determined by market forces.
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Accra (Greater Accra) 21 February 2002 – The Government has allocated 349.9 billion cedis to the Ministry of Food and Agriculture in the 2002 Budget to enable it to implement its programmes and policies. The allocation represents 27.3 per cent of the total budgetary allocation for the economic and services sector.
The Minister of Finance, Mr Yaw Osafo-Maafo, announcing this when he presented the 2002 budget to Parliament in Accra on Thursday, said the Agricultural Services Investment Programme, which Parliament approved in July last year, would receive a budget support totalling 121 billion cedis in the first year.
The Minister said of equal importance would be the support for smallholder rice farmers to help reduce rice importation. The government hopes to reduce rice imports by 30 per cent in 2004. Mr Osafo-Maafo said other key strategies were to increase production of selected food crops to ensure food security.
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Accra (Greater Accra) 21 February 2002 - The government would this year spend 720.6 billion cedis on various programmes in the Judiciary and the security services to promote public safety and good governance.
Finance Minister Yaw Osafo-Maafo, who announced this on Thursday when he presented the 2002 budget, said 100 new attorneys would be recruited for the Attorney- General's Office over the next three years while 1,000 new police personnel would be enlisted.
The Ghana Prisons Service would also get 300 new personnel. Mr Osafo-Maafo said the Police Service would get 400 vehicles and have its communication system upgraded.
More fast track courts would also be established to strengthen the Judicial Service. For the Ghana Armed Forces, its accommodation facilities for staff would be expanded, the Minister said.
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Accra (Greater Accra) 21 February 2002 – The Government would reconstruct three key trunk roads and construct one major road in every region of the country during the year, the Minister of Finance Mr Yaw Osafo-Maafo, said on Thursday.
Presenting the 2002 budget to Parliament, the Minister said the major trunk roads: Accra - Yamoransa, Accra - Kumasi and Accra - Aflao would be reconstructed as part of the government's policy to expand and upgrade infrastructure facilities to boost economic activities and create wealth.
He also announced the acquisition of 100 high capacity buses, which would be injected in the public transport system in pursuit of the government's desire to introduce a mass transportation system.
The budget comes in the first year of the implementation of the Ghana Poverty Reduction Strategy, which identifies a comprehensive set of policies to support economic growth over a three-year period.
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Finance Minister meets Economic team on
2002 budget
Accra (Greater Accra) 19 February 2002 - Yaw Osafo Maafo, Minister of Finance, is meeting with members of the National Economic Management Team to fine-tune the final draft of the 2002 budget, to be presented to Parliament on Thursday.
The meeting, which started on Monday morning under the chairmanship of Joseph Henry Mensah, Senior Minister, is a follow up to a similar one held at Ho over the weekend.
A reliable source at the Finance Ministry told the Ghana News Agency that the 2002 budget would seek to consolidate the microeconomic and fiscal gains made during the first year and provide stricter ways of ensuring that the economy enjoyed real growth.
"We hope to bring out measures that will ensure that we lift the economy higher than we came to meet it," the source said, adding; "first, we moved to stabilise the economy, now we will introduce policies to move the economy to a higher gear of growth."
The source mentioned transport, agriculture, infrastructure development, education and health and communication technology as key areas for attention this year. "This does not mean that other areas would not receive attention, but that the distribution of funds will be spread more evenly at certain portions."
On funding of health, the source said greater attention and funds would be given "to fighting the HIV/AIDS menace, which is fast killing a large chunk of our population."
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Accra (Greater Accra) 19 February 2002 - The following are highlights of the expectations of this year's budget:
The Association of Ghana Industries (AGI):
* Reduction or elimination of some of the taxes (Corporate income tax, ECOWAS Levy, EDIF Levy, NRL Levy, Inspection Fee and Processing fee to make local industries competitive.)
* Impose special tax on importation of cheap steel products in order to help grow local steel mills. (Ghana currently has the lowest import duty -1 0.0 per cent - on iron rods.)
* Reduce the 140 per cent excise duty on locally manufactured cigarettes.
* Zero rating for agricultural and pharmaceutical products.
* Review Tax Law Regulations LI 1675 which defines withholding tax rates for companies.
Financial analysts and business operators expect the government to:
* Sustain micro-economic discipline.
*Provide adequate funding for agriculture and ensure that private sector activities
are enhanced to meet the growing aspirations of Ghanaians.
*Increase funding for agriculture, education and infrastructure development
*Use budget to provide a clear set of economic stimuli and further tax incentives for
businesses to ensure available long-term funds for planning.
* Maintain VAT at 12.5 per cent
* Increase support for small-scale businesses through NBSSI and affiliate institutions
Databank Financial Services expects that:
* 2002 budget should sustain microeconomic discipline.
* Growth of economy should be the main focus.
* Increase revenue generation to help balance government spending.
* Stick to strict fiscal discipline.
* Address debt overhang for Ghanaian companies.
* Transparent divestitures.
* Intensify efforts to reduce inflation to below the current 23.5 per cent.
* Increase budget allocation for education and agriculture.
The World Bank Office in Accra expects the government to:
* Maintain microeconomic discipline.
* Government should spend what it has.
* Increase revenue collection base.
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Accra (Greater Accra) 18 February 2002 - Financial analysts, experts and business operators have tasked the government to sustain micro-economic discipline, provide adequate funding for agriculture and ensure that private sector activities were enhanced to meet the growing aspirations of Ghanaians.
They also asked the government to use the budget to provide a clear set of economic stimuli and further tax incentives for businesses to ensure available long-term funds for planning.
Databank, Ghana Union Traders Association (GUTA) and the Ghana Stock Exchange in separate interviews expressed these sentiments on their expectations of the 2002 budget. The 2002 budget to be released on Thursday is expected to revolutionalise nearly all the sectors of the economy and move the call for positive change to reality.
Mr Ken Ofori-Atta, Chairman of Databank Financial Services, said the 2002 budget should be able to give the assurance that the micro economic indices that have created a stable economic environment in the last year would be sustained. "Growth should be the main focus since merely stabilising an economy is not enough," he said.
He said increased revenue generation should be a key feature that should help balance the expected government spending during the fiscal year and beyond. Mr Ofori-Atta said there would be a negative effect if the government did not spend at all, adding that, "spending itself is not bad, only if it can be matched with a corresponding increase in revenue generation".
Asked if he expected a marked departure from the way budgets had always been designed, Mr Ofori-Atta said he did not think budgets in themselves were so different except that the sitting governments should stick to fiscal discipline and ensure that real private sector orientation would emerge within the budget.
"If the NPP government sticks to a regime of fiscal discipline, then things will work right and the economy can be planned and moved ahead." Mr Ofori-Atta said numerous companies had made significant borrowing and were in huge debts. "Somebody should address this huge debt overhang for Ghanaian companies within the shortest possible time since I do not think they can wait for say the two to three years that some proposals are pointing to."
On the continued external borrowings for the government’s development projects, the Databank boss said the problem of local counterpart funding was disturbing, because most often it was lacking.
He expressed regret that all the four major roads to be constructed this year were to be funded from external sources. On the proposed divestitures, Ofori-Atta said the divestiture of the government shares in companies like Coca Cola, Ghana Telecom and Barclays Bank must be floated on the Stock Exchange.
He noted that this would bring in Foreign Direct Investment, "a signal that shows that government is really getting out of business." The government faced a strong challenge of ensuring that "our small Exchange grows and it is through such activities and that of listed equities that it will grow."
They called for strict discipline on the divestiture by ensuring that only persons and companies with proven ability buy the companies. "It is crucial that we have people with capacity to run the companies, aside the transparency issue. If not the success we are striving to achieve will be a mirage."
One analyst said it was obvious that the government might not divest all its holdings in the companies through the Exchange, but said it was important for it to do so as a means of strengthening the local bourse.
Industry analysts also told said an inflation of 22 per cent was not good enough especially when Ghana's neighbours had lower rates. They thus urged the government to work hard through the budget to make life more bearable for the ordinary Ghanaian.
One analyst said the budget must increase allocation for agriculture, where immediate and sustainable jobs could be provided. Public-private sector partnership should also be strengthened.
The Association of Ghana Industries (AGI) said the government's policies had not had the desired impact on industry particularly, manufacturing. Budget proposals submitted to the government by the AGI said AGI and PEF surveys indicated that the manufacturing industry was faced with constraints that undermined its ability to grow and become competitive.
The proposals said: "Tight controls on government expenditure and marginal limitations on government borrowing have succeeded in bringing inflation down ...but nominal interest rates still imply a punitive real interest rate which remains detrimental to manufacturing."
The AGI said it expected the government to further reduce its borrowings on the domestic credit market as well as sustain expenditure at levels that would not destabilise the improving macro economic situation.
The AGI advocated for a zero rating of exempt goods such as agricultural and pharmaceutical products, explaining, "under current status they are not able to claim their input VAT. When they are zero-rated, we believe they could claim the input VAT that they pay."
They also urged the government to take another look at the 140 per cent excise duty on locally made cigarettes saying, "it is not only punitive to producers but an incentive to importers, suppliers and smugglers alike."
Officials of the World Bank office in Accra said they would wish the government stuck to its current strict fiscal discipline with a tight lid on spending. They said the government must work at sustaining transparency, spend only what they have and ensure that the microeconomics situation was sustained.
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Ho (Volta Region) 16 February 2002 - Mr Kyei-Mensah Bonsu, Deputy Majority Chief Whip on Saturday urged Parliament to brace up for its onerous duty of ensuring that "people have value for every cedi spent by government".
He said previous Parliaments in the country had not been stringent enough because members lacked the capacity to scrutinise financial appropriation bills put before it.
Mr Bonsu was speaking at a pre-budget seminar for chairpersons and ranking members as well as some parliamentary staff at Ho. The one-day seminar, which was organised by Parliament and Friedrich Ebert Stiffung (FES) was attended by 65 participants.
Mr Bonsu, who is also the Member of Parliament (MP) for Tafo-Suame, therefore, urged participants to make use of the opportunity - in this era of zero tolerance of corruption and an exercise to rid the public pay roll of ghost names - to enhance their capacity to enable parliament attain its goal of keeping the executive on its toes.
Mr Bonsu said a diligent Parliament could check malfeasance while another, through negligence would encourage it. Mr Cletus Avoka, MP for Bawku-West said the seminar was a serious one to facilitate and enhance the process of approval of budgets and not a "holiday or fun trip".
Mr Freddi Blay, MP for Elembelle and first Deputy Speaker observed that the "nitty-gritty" of Parliament's work was at the committee level and not on the floor where members often played to the gallery.
He said Parliament would be working in the interest of the people if it used its powers over the "purse" adequately by overseeing the proper use of funds. Mr Joerg Bergstermann, FES resident director said his organisation's support for the legislative body of the fourth republic since its inception in 1992 had become the cornerstone of the foundation's activities in the country.
Mr Bergstermann pledged that FES would continue to play a part in the efforts to strengthen the role and capacity of the Parliament of Ghana. "If and when we are so requested, we shall do whatever is within our limited means to support you in the key areas", he said.
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Ho (Volta Region) 16 February 2002 - Mr Joseph Henry Mensah, Senior Minister and Chairman of the Government's Economic Management Team, on Saturday said agreement was about to be reached to give Ghana the lease from paying a substantial part of its debts under the HIPC Initiative.
He indicated that there could be delays as a result of the postponement of an International Monetary Fund (IMF) board meeting in Washington and the task of clearing penalties for misreporting to the IMF, which was concluded on February four, this year.
Mr. Mensah was speaking to journalists on what to expect in the coming budget when he attended a pre-budget seminar for committee chairpersons and ranking members of Parliament at Ho.
Mr Mensah said, whatever happens, the country would "soon start enjoying the benefits of debt cancellations under HIPC". After the IMF Board meets on the issue, Ghana would go into negotiations with creditors, "and there would be some bilateral talks too."
The Senior Minister said relieves of 70 per cent and in some cases up to 100 per cent were expected from those negotiations, which would come on between April and May.
Mr Mensah, who parried questions on the budget and light heartedly referred journalists to the Finance Minister or wait for the Budget day, however, hinted that "there would be a lot of movement in the area of agriculture" where the thrust would be to develop new types of commercial farmers.
He also promised "a lot of action to reverse the spate of losses in the poultry sector in recent years, when the high cost of inputs made birds bred locally expensive and "knocked out hatcheries". Mr Mensah, however, declined to say if some subsidy would be introduced in the budget or not.
He also declined to comment on new revenue generation strategies and whether personal emoluments would be raised, saying only that the government needed a lot of money to undertake development projects and that if one wanted a higher income he should put in additional effort.
Mr Mensah said poverty alleviation grants to various groups were in place and yielding results though people had described the amounts being given out as ridiculous.
He said loan recovery so far had been satisfactory. Pressed to say if the budget would put a smile or a frown on the faces of Ghanaians, Mr. Mensah said, "it would make everybody happy". He hinted that the budget day slated for Friday February 22, this year could be shifted if the day fell on the impending Moslem holiday.
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