Economist raises doubt over budget figures

Dr. Nii Moi Thompson has said he is not too much convinced about the numbers provided by the Minister of Finance, Hon. Kwadwo Baah Wiredu in the 2007 Budget Statement regarding the projected Gross Domestic Product (GDP) growth rate of 6.2% by the end of the year.


Speaking to The Chronicle about his views on the budget, presented to Parliament yesterday, Dr. Thompson said the projected GDP growth rate of 6.2% would require more explanation before it will become a credible statistic.


Citing several reasons for doubting the projected growth rate of 6.2%, the Economist explained that there had been a several number of strike actions in the country during the period which would definitely lead to low productivity in the country.


Another reason he cited was the energy crisis that the country has experienced. He said these power cut lead to losses in almost all the sectors of the economy, especially the manufacturing sector.


“These unforeseen happenings, which were not there at the beginning of the year then become negatives,” he said.He said some other sector of the economy had to grow dramatically to offset this negative effect and he does not know.


“ We don’t know, somebody ought to tell us,” he queried.He promised to give a fair assessment once the information is provided. “Anything short of this would raise questions about the figures”.


He cited what happened last year about the growth rate. Earlier, he said the budget was strong in one aspect and weak in others.“In policy development, the private sector is the strongest both in terms of wealth and growth, especially with the abolition of the National Reconstruction levy and several other public-private-partnership”.


He mentioned private financing as one area.However, he said the budget fell short on human resource development and social services such as housing, which is a major issue for workers and small-scale medium enterprises especially rentals.


Dr. Thompson said not everybody could pay for four years of rent advance. This was not addressed.On good governance, he said the budget did not say anything about it, in terms of fighting corruption.



He said Ghanaians are saying high price for corruption but nothing was said in the budget to fight it. “Only the Procurement Law was mentioned,” he said.He hoped the Fair Wage Commission concept works out well.


In his opinion, a Financial Investment Analyst from the Strategic African Securities (SAS), Mr. Francis Nyoagbe, said Government is trying to put money into the pockets of Ghanaians and companies as well through the reduction of taxes through the abolition of the National Reconstruction Levy and other tax cuts.



Companies would then get enough profit for reinvestment and payment of dividends. “Whether the company would use the money the way government intended, is another matter,” he added.



He said the budget is to enhance credit in the economy, and by actually allowing the banks to publish banks’ annual rates and other fees charged. “It’s a good way of enhancing competition in the industry”.


He said customers would be able to shop for loans and be able to determine which bank is competitive and have better lending rates.Another positive thing, he stated was the intention of the government to register all property and to let people have titles to their properties.


This, the analyst said could be used as collateral for loans.Touching on investment into the energy sector, he said the investment of $470 million over the next two years was welcomed because Ghana needs a lot of energy in the country.


He however said the government should put in place a mechanism to provide incentives to the private sector to participate in the provision of energy, as government alone cannot provide all the energy needed.“Ghana is growing and a GDP of over six percent has been projected and a lot of energy is needed to propel the growth rate”.


The analyst noted that the budget is all about implementation.All the things the government has said it would do are all in its control and we would be happy if it would be implemented successfully.


Commenting on the tax incentives, the analyst said the exemptions given to the pharmaceutical industry must be replicated to the other sectors of the economy, like the services area, especially the insurance sector.


He stated that establishing a Fair Wage Commission is a laudable idea but stressed that the extent to which it would be responsive to the needs of workers is not known.


By the time the commission sets a fair wage, that wage would have been useless to the economy because of increases in prices.Mr. Nyoagbe said they have to consider utility prices and inflation in setting wages.


And if inflation and utility prices were not stable, the work of the commission would be useless, as they would have to adjust wages any time inflation goes up.
Source:http://www.ghanaian-chronicle.com/

President Kuffour will perform Ghana @50 anniversary launch

On March 6, 1957, Ghana became the first country in Africa south of the Sahara to gain independence from colonial rule. Next year, 2007, marks 50 years of independence.

The theme for the anniversary is: Championing African Excellence. Ghana’s first President, Osagyefo Dr. Kwame Nkrumah, envisioned this country as the guiding light of African independence and solidarity -- the BLACK STAR, the lode star of Africa.

Ghana’s attainment of independence and the subsequent ideological support it extended to other colonized countries on the continent, culminated in the emancipation of many of these countries from colonial rule.

There are three main objectives for the jubilee celebrations. They are:To celebrate and commemorate Ghana’s landmark achievement as the first country in Black Africa to attain independence from colonial rule;

To reflect on the evolution, development, achievements and drawbacks of our country over the past fifty (50) years; and to look forward to the future, to our vision of excellence in all fields of endeavour in the next fifty (50) years toward, and to our centenary birthday as a nation state.

Year-long activities marking the Golden Jubilee have been scheduled, beginning in January 2007 and ending in December 2007. The monthly themes are:
January :
Reflections
Febuary :
Towards Emancipation
March :
Freedom March
April:
Our Nation, Our People
May :
Our Wealth and Our Prosperity
June :
Heroes of Ghana Month
July :
African Unity Month
August :
Diaspora Month
September :
Service to the Nation
October :
October – Knowledge and Ghana’s Development
November :
A Healthy People, A Healthy Nation
December :
Final Curtain

BUDGET: Five billion cedis allocated for research

Mr Kwadwo Baah-Wiredu, Minister of Finance and Economic Planning, on Thursday announced that government had set aside five billion cedis in this year's budget as seed money in an endowment fund for science and technology research.

This, he said, was to encourage basic and applied research in order to generate new pillars of growth for the economy."For the purposes of encouraging basic research, government will promote the establishment of an Endowment Fund for Science and Technology Research by providing an initial allocation of A25.0 billion," he said.

Mr Baah-Wiredu said the private sector and other institutions would be encouraged to contribute to the Endowment Fund to create a regular flow of resources for basic research.

The Council for Scientific and Industrial Research (CSIR) would coordinate the initiative."The government encourages the private sector to take advantage of the generous tax incentives already in the Internal Revenue Act to step up their commercialization of research," the minister said.

He cited one such incentive package as the one given to the pharmaceutical manufacturing industries, saying that government had already granted exemptions to 66 active pharmaceutical ingredients.

"To further encourage local pharmaceutical industries to increase the supply of locally produced drugs and support the current National Health Insurance Scheme, it is proposed that VAT and import duties on raw materials and packaging materials used in manufacturing drugs for treatment of HIV/AIDS, Tuberculosis and Malaria be removed," he said.

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Baah Wiredu presents next year's Budget

Minister of finance and economic planning, Mr. Kwedjo Baah-Wiredu has assured Ghanaians that government is deeply concerned about the current energy gap facing the nation and is taking steps to solve them.

He says over a billion dollars is expected from ghana's foreign donors to help in the exercise. Mr. Baah Wiredu said these today in Parliament when he presented the budget statement for the next fiscal year.

Touching on interest rates, the minister said eventhough the country experinced an exceptionally difficult year in 2005, interest rates have remained fairly within acceptable limits at 14.5 percent.

The exchange rate he mentioned, has also been relatively stable against the major benchmark (the dollar) at 9,800.00 cedis from 9,211 cedis last year.

Mr. Wiredu added that government will support the mass transportation system by helping it acquire more fleet to augment their capacity.

The full statement will be available soon.

Minority MPs describe 2007 budget as re-cycled

Members of Parliament (MPs) have reacted differently to the 2007 budget statement with some NDC members describing it as a re-cycled budget and NPP members saying it is progressive.

According to the Minority side, the budget could best be described as "cut and paste," indicating that the 2007 budget was a re-cycled version of the 2006 economic policy of government and had nothing new to offer Ghanaians.

The Majority members, however, disagree saying it was a progressive budget, which would further grow the economy.The MPs were reacting to questions from the press after the Finance Minister, Mr Kwadwo Baah-Wiredu, had presented the 2007 budget to Parliament on Thursday.

Among some of the targets set for next year is the increasing of real GDP growth rate to 6.5 percent and bringing down inflation rates to a single digit of between seven and nine per cent.

An amount of 470 million dollars would also be invested over the next three years to improve the energy sector and a comprehensive public sector pay reform programme to stem the tide of strikes, would be given a boost by the establishment of a Fair Wages Commission to administer the new comprehensive pay structure.

Mr Kwame Osei Prempeh, Deputy Attorney-General, in his reactions, said the budget pointed to growth and Ghana, having weaned itself from the Breton Wood institution, could enter the world capital market to look for funds to expand the economy.

The Deputy Minister said all indicators from the 2006 budget showed that government had achieved a lot and the outlook for 2007 pointed to further growth.

Dr Benjamin Kunbuor, the newly appointed Minority Spokesperson on Finance and ranking member on the Finance Committee, said the budget was the same old repetition of development projects.

He touched on corporate tax incentives, and said despite the tax incentives given in the 2006 budget, no single company had been set up in any of the three northern regions.

On recent agitations on the labour front, he said, he expected government to come out with immediate plans to deal with the concerns of workers.According to him, the Fair Wages Commission yet to be set up, was just to allow government "to buy time.

" He said it was a long-term solution to the wages problems since it was going to take time to legally establish the commission and this fell short of the immediate responses needed to address the wages issue.

Alhaji Amadu Sorogho, (NDC-Abokobi-Madina) said the 2007 budget was a political budget meant to give hope to the NPP because it was short on new ideas and programmes."It is the same old repetition of development projects.

They need to do something," he said.Miss Theresa Tagoe, (NPP Ablekuma-South) and Mrs Gladys Ashietey, (NPP-Ledzokuku), were both emphatic that the 2007 budget had addressed issues of unemployment and the provision of good road network and what was needed was for Ghanaians to work hard to grow the economy.

Mr Freddie Blay, First Deputy Speaker, said the budget had adequately addressed the issue of salary rationalization and this was in the right direction since it was going to reduce tension on the labour front. 16 Nov. 06
Source:GNA

2007 Budget Highlights

The following are the highlights for the 2007 budget statement presented on Thursday to Parliament by Mr Kwadwo Baah-Wiredu, Minister of Finance and Economic Planning.

* Headline inflation declined to 10.5 per cent at the end of the October 2006 from 14.8 per cent at the end of December 2005.* Gross Domestic Product (GDP) growth rate projected at 6.2 per cent based on data through September 2006.*

Interest rates generally declined over the ninth month period to September 2006 but the main policy rate, the Bank of Ghana Prime Rate remained unchanged at 14.5 per cent since January 2006 when it was reduced by 1.0 percentage point to the current level.

* The Cedi depreciated by 9.5 per cent against the British pound and 7.8 percent against the Euro, while a moderate depreciation of 09 per cent was recorded against the US dollar.

* Provisional estimates of the Balance of Payments (BOP) recorded a modest surplus of 77.7 million dollars compared to a deficit of 195.8 million dollars in the same period of 2005.

* Overall fiscal deficit reduced from 6.7 per cent of GDP in 2003 to 2.3 percent of GDP in 2005.* Provisional fiscal out-turn for January to September 2006 shows total receipts of 31,292.7 billion cedis as against the out-turn of 23,723.7 billion cedis registered for the same period during 2005.

* Provisional out-turn for total payments for the first three quarters of 2006, comprising statutory and discretionary payments was 31,929.7 billion cedis as against 23,723.7 billion cedis for the corresponding period 2005.

* Ghana's total medium debt and long term external debt at the end of 2005 stood at 6,347.9 million dollars. This amount had been reduced significantly to 2,143.79 million dollars by the end of September 2006 as a result of a 66 per cent debt reduction under the Multi-lateral Debts relief initiative (MDRI).

* The BoG accumulated a net international reserve of 263.5 million dollars compared with 7.5 million dollars during the same year in 2005.* The agricultural sector is projected at 5.7 per cent indicating a 0.9 percentage shortfall against the target of 6.6 per cent.

* Industrial growth is projected at 7.3 per cent with electricity and water as the major contributing sub-sectors. *In the mining sector, gold is projected to register a growth of about 9.0 per cent.* The manufacturing sector growth is projected at 4.2 showing a slowdown from the 5.0 per cent recorded in 2005.

* The construction sector projected to grow at 8.2 per cent. * Credit to the private sector went up from 77.4 per cent a year ago to 81.6 per cent for the year.* Employment went up by 12.5 per cent.

* The establishment of a Fair Wage Commission to administer the new Comprehensive Pay Structure.
Source:GNA

Government unveils Golden Jubilee Budget

Government on Thursday unveiled the 2007 Budget and Financial Statement dubbed Golden Jubilee Budget saying it was to promote growth and stability for all.

In a foreword to the Budget presented by the Minister of Finance and Economic Planning, Hon. Kwadwo Baah-Wiredu to Parliament, President John Agyekum Kufuor said it would be used as the beginning of the solution to problems of salaries in the public sector.

He said to ensure order and equity all round, the Government was setting up a Fair Wages Commission to oversee the implementation of this new programme.

President Kufuor noted that despite gains made by the Government, there were problems at the labour front, resulting partly from a distorted public sector salary structure, which was also poorly administered.

The Government was, therefore, using the Dudget to begin the implementation of a new comprehensive public sector pay reform that emphasises equal pay for work of equal worth.

"The broad objective is to aim for wage increases in line with productivity gains, cost effectiveness and efficiency."President Kufuor quoted an adage which says that "Rome was not built in a day, and said: "Today, we are laying the first block for a more rational salary structure and administration.

"He said the Government had realised, however, that this new system would have to be phased in, 93but we will continue to implement the social policies and programmes that will accelerate the growth we need to achieve our target.

President Kufuor said the public sector reforms that were being pursued would be sustained to boost private sector development through an enhanced public services delivery, in order to deepen the public-private sector partnership for accelerated growth.

"I am, therefore, appealing to the nation and all its sectors to hold fast and rally together so that we pursue a collective vision in the belief and confidence that Ghana will succeed in becoming a middle income country by 2015.

"President Kufuor said the sacrifices the nation had made over the past couple of years had yielded the desired positive results, such that the economy was resilient, even in the face of rising crude oil prices, adding that Government remained committed to those polices that have brought the nation this far.

"On the eve of our 50th anniversary as a nation, I am happy that our economy is vibrant and the aspiration of attaining the status of a middle-income country in the next decade is within our reach.

"With vigorous infrastructural development, the introduction of the National Health Insurance Scheme, Capitation Grant, Free Bussing and the School Feeding Programme for children and the establishment of financial schemes for micro, small and medium sized enterprises, we have made significant gains towards the Millennium Development Goals (MDGs).

Indeed, we are likely to attain some of these goals before the UN deadline."President Kufuor said economic growth had exceeded targets for three consecutive years and this year, the recorded growth of 6.2 per cent exceeded the target of 6.0 per cent, and for next year, 6.5 per cent was the confident forecast.

Progress made is recognized by the international community: Ghana has been rated the most peaceful nation in Africa, given a B+ sovereign credit rating, ranked the fastest reforming nation on the Continent and ninth in the world in doing business.

Source :GNA