General News of Thu, 5 Feb 20041


The Hon. Minister for Finance And Economic Planning, Mr. Yaw Osafo-Maafo today presented The 2004 Budget Statement And Economic Policy Of Government to Parliament in Accra under the theme: Releasing Energies Of Individuals And Businesses Towards Sustainable Growth

  • Creating a more friendly environment to support business
  • Tax reliefs to individuals and businesses
  • Strengthening and streamlining existing revenue mobilization strategies to maintain robust revenue collection
  • Reduction of import duties and removal of VAT on selected inputs

  • President’s priorities cornerstone for transformation of society viz:
    - Infrastructure development
    - Modernisation of Agriculture based on Rural Development
    - Delivery of enhanced Social Services
    - Strengthening of institutions of Good Governance
    - Strengthening the Private Sector
    Developments in the West African Monetary Zone (WAMZ)
    • Met 3 out of 4 convergence criteria, the best in the WAMZ countries
    • Location of the Headquarters of West African Central Bank in Accra


    • Real GDP growth of 5.2 percent as against target of 4.7 percent over performing the medium term target of 4.9%
    • Decline in year-on-year inflation to 23.6 percent end December, 2003 after peak of 30 percent in April, 2003
    • Depreciation of only 4.7 percent of cedi against the US dollar
    • Overall Budget deficit of 3.4 percent of GDP marginally above the budget target of 3.3 percent of GDP
    • Net Domestic financing registered a repayment of 0.4 percent of GDP against target of zero
    • Healthy levels of foreign exchange reserves – covers 3.9 months of imports
    • Robust and sustained tax revenue growth:

      - ?4.4 trillion in 2000 (16.3% of GDP)
      - ?6.6 trillion in 2001 (17.2% of GDP)
      - ?8.5 trillion in 2002 (17.5% of GDP)
      - ?13.4 trillion in 2003 (20.5% of GDP)

    • Ghana Stock Exchange (GSE) All – Share Index appreciated by 154.7% (142.7% in dollar terms) – best ever
    • Sharp fall in 91-day Treasury Bill Rate from a peak of 35.3% in June, 2003 to 18.3% end of year
    • Growth in Exports:
      - US$1,867.1 million in 2001
      - US$2,015.2 million in 2002
      - US$2,297.2 million in 2003

    • District Assemblies Common Fund (DACF) and GETFUND – current on transfers into the DACF & GETFUND
    • Ghana’s Sovereign Credit Rating
      B+ rating by Standard and Poors
      B with a positive outlook rating by Fitch Ratings



      • Rehabilitation of sections of Accra Kumasi road.

      • Commencement of works on Mallam Kasoa and Kasoa-Winneba road sections of Accra – Yamoransa road

      • Study progress on Tema-Sogakope section of Accra-Aflao road

      • Work on Tettey-Quarshie interchange about 50 percent complete

      • Commencement of work on Kwame Nkrumah – Achimota road, Tema Hospital-Ashaiman road including interchange

      • Inchaban-Sekondi road

      • 1,130 new boreholes fitted with hand pumps completed in the rural areas

      Modernized Agriculture

      • Ayensu Starch Factory started production in 2003 and exported first consignment of 240 tonnes in September, 2003.
      • 30,305 hectares of forest plantation establish in 2003 creating 95,000 jobs.

      Cocoa Sector

    • Producer Price increased to 9 million at the beginning of 2003/2004 Main Crop Season

    • Price almost a 3 fold increase over that paid in the 2000/2001 Main Crop Season


    • Bonus payment of ?154.6 billion

    • Off-shore loan syndication of US$650 million for cocoa purchases in the 2003/2004 Crop year

    • 496,793 metric tones of cocoa produced second highest in the country’s history

    • ?253 billion spent on control of capsid and black pod covering an area of 1.6 million hectares

    Enhanced Social Services

    • 685 3-unit classroom each with toilet facilities, teachers common room, store and library built across the country

    • Primary gross enrolment ration improved from 79.5 percent to 81.1 percent

    • Funding provided for implementation of 120 District Mutual Health Insurance Scheme in 90 districts

    • Implemented a programme for the prevention of mother-to-child transmission of HIV in 19 sites

    • Provided Anti-Retro-Viral Therapy to AIDS patents at 4 hospitals.

    • Skill training for 10,000 youth

    Good Governance

    • 1,200 new personnel recruited for Ghana Police Service


      Utilisation of HIPC Funds

    • Disbursements amounted to ?850.79 billion by the end of the year

    • Macroeconomic Objectives for 2004

      • A real GDP growth of at least 5.2 percent

      • Single digit inflation

      • Foreign exchange reserves cover of not less than 3 months;

      • A domestic primary surplus of 2.3 percent of GDP; and

      • A budget deficit of 1.2 percent of GDP

      Significant Developmental Activities for 2004

    • Start of work on Ofankor-Nsawam and Kumasi-Fumesua sections of Accra-Kumasi Road

    • Continuation of work on sections of Accra-Yamoransa road

    • Begin work on Sogakope-Akatsi sections of the Accra-Aflao road
    • Continuation of Government’s regional road programme
    • Upgrading of a number of roads to bituminous surfacing
    • Commencement of works on Central Business District roads including reconstruction of the High street in Accra

    • Development of Asafo Market interchange in Kumasi
    • Continuation of the Tamale arterial roads

    • The metro Mass Transit Company will take delivery of 100 DAF/Neoplan buses from Holland


    • Construction of 2000 new boreholes fitted with hand pumps

    • Completion of Buipe-Bolgatanga petroleum products pipe line projects
    • Provision of 20 ground water irrigation equipment
    • Completion of 100 factory units under garments and textiles imitative
    • Start of work on 25 schools under second phase of Model Senior Secondary Schools Programme.
    • Continuation of first phase involving 31 schools
    • Distribution of 365 saloon cars, 500 motor cycles and 1000 bicycles for health professionals under hire purchase scheme
    • Completion of 15 health centres and rehabilitation of 7 health facilities.
    • Rehabilitation of Maternity and medical blocks at the Korle-Bu Teaching Hospital
    • Construction of 5 blocks of flats and 12 block of flats for Doctors at Komfo Anokye and Korle-Bu respectively.
    • Expansion of 11 nursing training schools


    Tax Relief Measures

    • Increase in the minimum tax free threshold from ?1.2 million to ?1.5 million

    • Widening of the income tax bands

    • Reduction in corporate income tax rate from 32.5 percent to 30 percent effective next financial year.

    • Special tax rate of 25 percent for companies listing on Stock Exchange for the first time

    • 5-year tax holiday for new agro-processing firms

    • Revised taxes for agro-processing as follows:
      :::Accra and Tema - 20 percent
      :::Other Regional Capitals - 10 percent
      :::Outside Regional Capitals - zero

    • For 3 Northern Regions zero tax rates for

    Agro-processing firms irrespective of location

  • 7-year tax holiday for waste processing enterprises

  • reduction in vehicle income tax for articulated trucks from ?1.2 million to ? 900,000

    Reduction of Import Duties and Removal of VAT on Selected Imported Imputs
    • reduction in import duty on aluminium ingots from 10 percent to 5 percent
    • Zero rating of imported industrial raw materials
    • Removal of duties on imported lumber
    • Removal of VAT on irrigation pumps
    • Removal of duty and VAT on imported inputs for fishing nets and fishing ropes
    • Removal of taxes on musical instruments
    • Removal of GCNet processing fees on currency importation

    Other Measures
    • DVLA to be connected to GCNet system to facilitate registration of imported vehicles
    • Government to derive appropriate returns on investments in commercially oriented public institutions
    • Rationalization of interest payments in Government contracts
    • Sale of low cost houses to occupiers
    • Floatation of new shares on Ghana Stock Exchange
    • Tender for new management contract for the bank
    • Floatation of new shares in GCB on the Ghana Stock Exchange and encourage Ghanaians to acquire shares.
    • Consumer protection through enforcement of health and safety standards

    Value Addition to Cocoa Industry
    • Government to support commercial production of cocoa industrial by-products developed by Crop Research Institute of Ghana – animal feed, fertilizer, soap, pomade and alcoholic beverages
    • 5-year tax holiday for companies investing in production of cocoa industrial by-products
    • allocation of ?25 billion to support the establishment of such industries

    Other Support Measures
    • Government has voted an amount of ?18 billion for the purchase of new varieties of pineapple suckers.
    • Government to support the development of a regulated warehouse receipt system

    Financial Sector Reforms
    • Establishment of Long-term Savings Plan
    • Introduction of other financial bills to accelerate the process of financial deepening – the Foreign Exchange Bill, Credit Union Bill, Insurance Bills and Cheques Bill
    • Government to recapitalise Exim-Guaranty Company Limited
    • Establishment of National Micro Finance Administration to coordinate and administer micro finance programmes
      Source: ISD

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