BUDGET: There is sustained growth in the economy

Accra Nov. 15, GNA - Mr Kwadwo Baah-Wiredu, Minister of Finance and Economic Planning, on Thursday said the past seven years had witnessed sustained growth in the economy. This, he noted, was achieved by continually maintaining the broad policy orientation of reducing the country's level of poverty while providing the appropriate environment for private business to grow and thrive.

"An analysis of the key economic indicators points to a stable, resilient and growing economy," he said. Mr Baah-Wiredu said this when he presented the 2008 Budget Statement and Economic Policy to Parliament.


"All sectors of the economy have achieved varying degrees of success and the combined effect of this effort has culminated in a strong and thriving economy, which has been able to withstand numerous domestic and external pressures.


"This positive state of affairs can be attributed to Government's strict adherence to a number of measures, including strong fiscal discipline; prudent monetary stance and the implementation of well focused policies even during the previous election year.


"Admittedly, some of these policies have not been politically favourable but we have been resolute in our conviction that we should not trade a better economy and improved livelihood for political gains." Mr Baah-Wiredu said the Medium Term Strategy as spelt out in the Growth and Poverty-Reduction Strategy (GPRS) II was to achieve middle-income country status by 2015.


"Within this framework, Government has harnessed efforts in all sectors towards accelerated growth and reducing poverty. In this, the focus has been wealth creation through developing our human resources, promoting the private sector and ensuring good governance." Touching on performance in 2007, Mr Baah-Wiredu said the economic performance as measured by growth in GDP stood at 6.3 per cent, slightly lower than the projected 6.5 per cent.

This result, he noted, was achieved despite the major energy challenge that the country faced.


On the resolution of the energy crisis, Mr Baah-Wiredu said in an effort to address the energy crisis, a number of short, medium and long-term interventions targets were pursued.


"Significant among them is the successful negotiation of the $622.0 million loan for the construction of the Bui dam and Bui City," he said, adding, "this investment is the second largest single investment in the history of the country after the Akosombo Dam."


He said as part of measures to reverse the energy crisis and to improve upon the generation, transmission and distribution of electricity, significant expenditures had been made since 2006 and by end-2008 government's total budgetary expenses would have exceeded US$2 billion.


This included the purchase of crude oil and generation and transmission equipment, he said. "Crude oil alone would have received an allocation of about US$1 billion for the same period."

He said given the desire of all Ghanaians for an enduring solution to the power crisis, it was Government's belief that all were ready and willing to pay realistic rates to ensure a much more efficient and reliable energy supply.


On the re-denomination of the Cedi, Mr Baah-Wiredu said it was to help to remove the significant dead weight burden that the old cedi regime placed on the economy. "This measure, taken in the context of strong economic fundamentals and macroeconomic stability, has already resulted in significant efficiency gains which are expected to enhance the way we do business." The Finance Minister said the successful entry of Ghana into the Eurobond market was another unparalleled achievement for the year. "The over-subscription of the bond, together with the quality and internationality of the investors is, for us, a clear indication of the confidence that the international community reposes in the Ghanaian economy and the evidence that our political direction is on the right track.


On the celebration of Ghana@50, Mr Baah-Wiredu said the country celebrated the 50th anniversary and successfully hosted the African Union (AU) Summit and the Africa Growth and Opportunity Act conference in June and August, 2007, respectively.


Touching on the new education reforms, the Finance Minister said it sought to improve upon the educational system in response to the needs and expectations of both individuals and industry.


"A comprehensive package of reforms has been introduced with the main components, including teacher upgrading and deployment; attainment of gender parity; the active promotion of science; technology and research; and mainstreaming of preschools into the basic education system. Mr Baah-Wiredu said as a demonstration of Government's commitment to decentralisation, the District Assemblies' Common Fund, which had been pegged at 5.0 per cent of tax revenue since 1993 had been increased to 7.5 per cent. In addition to this, 25 more districts have been created to facilitate better governance and accelerate socio-economic development at the district level. "A draft comprehensive policy on decentralisation has been developed, together with an intergovernmental fiscal framework to guide the fiscal relations between Central Government and the sub-national governments." On the Fair Wages and Salaries Commission, Mr Baah-Wiredu said in fulfilment of Government's commitment to rationalize public sector wages, the Fair Wages and Salaries Commission Act, (Act 737) had been enacted. "The Fair Wages and Salaries Commission, which is legally mandated to administer a new comprehensive pay structure and ensure equity in the

Government Payroll has been constituted. "To pave the way for the successful implementation of the Commission's work, Government had earlier removed distortions and corrected placements on the Ghana Universal Salary Structure (GUSS). "The reform process is ongoing. The obvious challenge is to manage labour expectations particularly in an election year. "To this end, the necessary consultations will be undertaken with and among stakeholders, with a view to comprehensively and successfully dealing with the issue of wage reform once and for all," he said. Mr Baah-Wiredu said with the country poised for accelerated growth, a massive infusion of capital was required to undertake the necessary infrastructure to facilitate such growth. "The discovery of oil in commercial quantities could, therefore, not have come at a more opportune time." He said in order to ensure that the oil resources were utilised in a judicious manner aimed at deriving the maximum benefit for the country, measures were being taken to put in place the appropriate legal and regulatory frameworks, as well as fiscal rules, and to ensure the training of Ghanaian human resources in various disciplines to 'manage this God given resource'.


A technical team has also been constituted to undertake the necessary analysis of the impact of the oil discovery on the economy in the long term, he said.


Touching on the National Youth Employment, Mr Baah-Wiredu said the overall objective of the programme was to empower the youth to enable them to contribute more productively towards the socio-economic and sustainable development of the nation.


This, he noted, was in line with Government's commitment to provide jobs for the youth as articulated in the GPRS II. "Seven out of the 10 employment modules have been rolled out and are being implemented across the length and breadth of the country. "A total of 107,114 youth have been engaged on the seven modules as at August 2007," he said. Mr Baah-Wiredu said in April 2007, the Ghana Statistical Service published a book on the pattern and trends of poverty in Ghana from 1991 - 2006, which utilized data from the fifth round of the Ghana Living Standards Survey (GLSS). "From the data provided, it is evident that poverty has reduced significantly and Ghanaians are obviously better off today than they were seven years ago. "The indicators show a downward trend in poverty from 39.5 per cent in 1998/1999 to 28.5 per cent in 2005/2006." He said an analysis of poverty expenditures revealed that poverty-related expenditures increased from GH=A2233.9 million in 2002 to GH=A21,237.4 million in 2006, representing 21.67 per cent and 34.86 per cent, respectively, of total Government expenditure. Touching on natural disaster management, Mr Baah-Wiredu said in August and early September, 2007 an unprecedented heavy rainfall led to severe flooding in Ghana, wreaking havoc in areas that were already socio-economically disadvantaged. He said the Government was mindful of the suffering experienced by those so affected and had initiated actions to address the existing vulnerabilities in consonance with life-saving interventions.