Debt Relief cuts external debt payments

Accra, June 21, GNA - Mr. Kwadwo Baah-Wiredu, Minister of Finance and Economic Planning on Wednesday said the recent debt relief to Ghana has resulted in a reduction in external debt payments by about 72 per cent.

This has resulted in a sharp reduction in pressure on foreign currency demand and is expected to improve the sovereign credit rating of Ghana, which prior to the Multilateral Debt Relief Initiative stood at B+.


Addressing the 13th Consultative Group (CG)/ Annual Partnership Meeting in Accra, the Finance Minister said key economic indicators and elements of Ghana's development recently demonstrated the nation's efforts to create a congenial investment environment.


Doing business in Ghana today, one is assured of a stable economy, a stable political environment, stable business conditions, a large consumer market comprising the ECOWAS sub-region, a literate workforce and an improving infrastructure base.


The Meeting is under the theme: "Results and Resources: A Partnership for Shared Accelerated Growth" and according to the Minister it reinforced the on-going efforts to track implementation of progress using indicators derived from the GPRS.


Mrs. Mary Chinery-Hesse, Chief Advisor to the President and Vice Chairperson of the National Development Planning Commission, chaired the function, which is focused on accelerating growth.

It would also examine the management of the economy especially the use of donor funds, sourcing of extra and new funding for development and to address the thorny issue of delays in fund disbursements. He said this year's Meeting would touch on topics dear to government since it is eager to achieving the 8 per cent growth target. Mr. Baah-Wiredu said the quantum of investment needed for these investments needed to achieve this level of growth has been worked out and would be shared with partners.


He commended the regular dialogue on Ghana's development. He said it was critical in addressing the challenges the country was facing in moving forward and help prioritize our spending on the areas that will make a significant impact on the people of Ghana.


Recounting the core performance of the economy, Mr Baah-Wiredu said inflation has been cut by almost two-thirds into a single digit range while headline inflation is down within single digit-range as at March 2006, from 41 per cent in 2001.


He said the cedi had remained virtually unchanged against the dollar over the last 18 months and domestic debt to GDP ratio contracted from 22 per cent in 2001 to 11 percent in 2005.


Fiscal deficit has moved from nine per cent in 2001 to two per cent in 2005.

"Our fiscal policy management has seen improving public expenditure management and promotion of effective debt management," he added, saying that, " there has also been improvement in fiscal resource mobilization."


The Ghanaian economy grew at 5.8 per cent with inflation recorded at 14.4 per cent. But recent economic performance shows a 12-month CPI inflation rate of 9.9 per cent, a gross international reserve build-up equivalent to four months import cover and an overall budget deficit equivalent to 2.7 per cent of GDP, the Minister said.


Mr. Mats Karlsson, World Bank Country Director said improvements in the Ghanaian economy have not gone unrewarded. "In this direction, partners have not only delivered on what they promised at the last CG, they have raised the resource flows.