Accra (Greater Accra), The Ghana Government realised more than 400 billion cedis from the sale of shares of the Ashanti Goldfields Company Limited (AGC) on the Ghana Stock Exchange in 1994, Mr.Moses Asaga, Deputy Minister of Finance, told Parliament on Wednesday.
"The proceeds were made up of 60.9 billion cedis and 106.7 million dollars",he said adding that the government also realised 292 million dollars from the flotation on the London Stock Exchange.
Mr. Asaga, who was answering questions relating to his sector, said the total proceeds from the transactions on the two stock exchanges, were paid into the Consolidated Fund to support the government's development programmes.
Asked what the government is doing to bail out the AGC from its current economic predicament, Mr. Asaga said the government is involved in negotiations to bail out the company, adding, "we will make sure that the management of AGC take the right decisions to salvage the company."
On how much was spent to support development projects at Obuasi, where the AGC is located, the Minister said proceeds from the sale of the company's shares would have gone to the shareholders ? in this case the Government of Ghana, who would have decided how to use the funds.
He explained, however, that the Consolidated Fund is used for various purposes, the most important being to support development. "It will be difficult to isolate the various uses to which monies from the Fund are put."
Mr. Asaga agreed with a suggestion that road and water projects being undertaken at Obuasi are examples of development projects being financed from the Consolidated Fund.
He told the House that the Ministry of Finance, in consultation with the Ministry of Trade and Industry, is designing a number of tax policies to promote sustainable development in the local industry.
Among the policies are the reduction in export taxes, abolition of special taxes on imports, re-alignment of import duty rate on motor vehicles and reduction of import duties on computer software and accessories, among others.
The Minister said in order to check and reduce high incidence of smuggling, the government is harmonising the country's duty rates with other West African sub-regional rates.
On the directive that government organisations purchase only made-in-Ghana Goods, Mr. Asaga said following the directive, the Ministry submitted a memo to the Cabinet on modalities for procurement of locally-made goods by public institutions.
He said the Cabinet discussed and approved the memo and directed that the Ministries of Finance and Trade and Industry should liaise to issue a circular to all concerned conveying details of the modalities for their compliance.
The circular, he said, has been issued and an institutional arrangement has been made to monitor its implementation.
Mr. Asaga, in reply to a question, said with the financial sector reforms, commercial interest rates are no longer regulated and banks are free to determine their own lending and borrowing rates.
He said until 1987, the monetary authorities directly controlled interest rates by fixing maximum bank lending rates and minimum deposit rates.
He said under the current economic dispensation, the monetary authorities may use the bank rate to influence the short-term rates in the bills market, which in turn, is expected to induce appropriate changes in the structure of commercial banks' borrowing and lending rates.
The Minister explained that movements in bank rates are, therefore, expected to send signals to the bank as to the desired general direction of interest rates in the economy.
Mr. Asaga told the House that since September, 1998, the bank rate has been adjusted downwards four times, from 49 per cent to the current rate of 31 per cent, in line with the steady decline in inflation rate.
He said in response, the commercial banks' lending rates declined from an average of 41 per cent to 33.5 per cent
A questioner had asked the Minister whether the Ministry will request commercial banks to revise their lending rates to reflect the realities of the economy at any given period.
On a suggestion that the Ministry of Finance initiates a legislation to make it bligatory for all rural and community banks to support community-initiated projects in their areas of operation, Mr Asaga explained that these financial institutions are private limited liability companies.
"And like any other private company, their obligation to contribute towards development projects in their catchment areas is a moral obligation and not a statutory one.
"It will be inappropriate for rural and community banks to be bound to such a statutory obligation while other large private companies operating in the country are not so bound", he said, adding, "there are many rural and community banks that are currently supporting community-initiated projects even in the absence of legislations".
