EU pumps more money into the Ghanaian economy

Accra, Jan 26, GNA - The European Union (EU) and the Ghana Government on Wednesday signed an addendum to transfer 32.5 million euros out of the 80 million euros of the reserve fund to support Ghana's Country Strategy Paper (CSP) and the National Indicative Programme (NIP).

The grant is to be used as additional funds for the extension of the cocoa support programme and the extension of the period of coverage of the Multi-Donor Budget Support Arrangement to the 2007 Financial Year.

The CSP and NIP are strategy documents covering the period 2002 to 2007 and provide the broad framework for EU relations with Ghana, based on the overall national strategy, which is the Ghana Poverty Reduction Strategy (GPRS).

Mr Stefan Frowein, Head of EU Delegation, who signed on behalf the Union explained that 10 million euros of the amount would be channelled into the Rural Development Focal Sector, especially the Cocoa Sector Support Programme, while the rest would be used for Macro-Economic Budget Support.

He said the rehabilitation of a number of feeder and trunk roads would continue with due attention to organisational and managerial aspects.

He said 40 million euros would go into the mining sector while 4.7 million euros would be used as Ghana's contribution to the African Peace Facility.

Mr Frowein said 2.8 million euros would remain in the reserve account as a buffer for emergency situations. The time frame for the Multi-Donor Budget Support Programme would be extended for another year.

"Reinforcement of funding in the road infrastructure sector would be catered for depending on the implementation and enforcement of the national axle load policy and adequate road maintenance," Mr Frowein stated.

With the additional funds, the total assistance from the 9th European Development Fund (EDF) to Ghana for the period 2003 to 2007 is 281 million euros.

The EU, Mr Frowein said, was also supporting the mining sector with 40 million euros in addition to global initiatives such as polio-eradication of which Ghana was a beneficiary.

Dr Anthony Osei Akoto, Acting Deputy Minister of Finance and Economic Planning (MFEP), who signed on behalf of Ghana, explained that the CSP and NIP aimed at supporting Government's effort at achieving sustainable economic growth and accelerate poverty reduction within a sustained democracy as enshrined in the GPRS.

He said currently the CSP and NIP were providing an initial amount of 311 million euros for targeted interventions.

These are 231 million euros for the development budget; 80 million euros for unforeseen needs such as emergency, assistance and support to mitigate adverse effects of instability in export earnings.

Dr Osei Akoto said disbursement under the EU-Ghana Cooperation grew to a record level in 2003 the base year for the Mid-Term Review. The total grant disbursement in 2003 was 63.1 million euros, which was a further increase to the previous year's 46.8 million euros and nearly three times the 5-year average of the preceding period of 22.3 million euros for the years 1997 to 2001.

He said the tremendous improvement in the last two years had qualified Ghana to utilize resources from the Reserve Funds for the development purposes, which otherwise would have been idle under the unforeseen circumstance.

In addition to the transfer of funds, Dr Osei Akoto said the Ministry in collaboration with the EU Commission had embarked on a de-commitment exercise.

He explained that the MTR and the de-commitment exercise had made available a total of 50 million euros to Ghana for development projects and programmes.

Dr Osei Akoto said Government was determined to move the economy forward to achieve the central objective of reducing poverty and raising the standard of living of the people.

The Acting Deputy Minister pledged the Government's commitment to the achievement of desired results, adding: "We trust that you would continue to give us your maximum cooperation in this venture."