Finance Minister outlines financial challenges

Accra, Aug. 25, GNA - Finance Minister Dr Kwabena Duffuor said government must deal with the challenges of outstanding arrears and the payment of huge judgement debts in order to meet the fiscal objectives in the 2009 budget.

The Minister told Parliament that MDAs had submitted outstanding arrears and commitments related to the year 2008, amounting to GH¢1.7 billion, which was far in excess of the provision of GH¢533.5 million made for the clearance of arrears and commitments in the 2009 budget. "This information was not made available by the MDAs at the time of the budget preparation. The arrears and commitments are currently being subjected to due diligence and audit to ascertain their authenticity or otherwise," the Minister said.

Also of concern, Dr Duffuor said had been a growing concern for the number of court judgments against Government, resulting in the payment of judgment debt amounting to GH¢49.2 million against a budget provision of GH¢30 million.

Government is still saddled with an additional GH¢100.0 million court judgment debts, including land compensations, which date back to the immediate post independence period, and these are being paid as part of a consolidation of our democratic process, he said.

"In situations where local and foreign courts had ruled that payments should be effected, Government was adamant. This resulted in astronomical compounded interests, loss of profits claims and damages, which we are now compelled to pay," he said.

Besides, the indebtedness of TOR, VRA and BOST continue to pose major challenges to the economy. Ghana Commercial Bank's (GCB) exposure to the oil sector stands at about GH¢989.7 million, while the indebtedness of the sector to the Standard Chartered Bank is about US$165 million.

Dr Duffuor said as a result, GCB was not able to establish Letters of Credit for the import of crude oil.

This fiscal risk to the economy has received the attention of His Excellency the President, who has instructed that the debt of GCB be restructured to give some fiscal space, he said.

On Public Financial Management (PFM) Reforms, the Minister said the reforms which had remained on pilot basis for years would be implemented fully.

"The first phase of this programme has already taken off. It is expected that the reforms would improve the financial management of MDAs and MMDAs."

On labour issues, the Minister said government had successfully negotiated a 2009 wage settlements with public sector workers. The roadmap for the implementation of the Single Spine Salary Structure (SSSS) was being pursued to ensure that the new salary structure was implemented in 2010.

Additionally, Government has paid the salary arrears of GH¢951,000 for June and July 2009 to the staff of the Ghana Railway Corporation. Arrangements are advanced to pay arrears to the corporation's retrenched staff amounting to GH¢566,204.