Parliament approves 2007 Budget

Accra, Dec. 4, GNA-Parliament on Monday approved the Financial Policy of the Government for the 2007 fiscal year, read by Finance and Economic Minister on November 16, 2006.

The approval followed days of extensive debate on both Majority and Minority sides of the House on the budget which the Majority had called the Jubilee budget, but which the Minority rather called Awam (fake) Budget.

Mr Alban Bagbin, Minority Leader in Parliament, presenting a summary of the views of the Minority said the Minority had noted 32 inconsistencies in the data of the 2007 Budget.

He said there was no vision document to realize the development programmes outlined in the budget, and wanted to know who approved an amount of 600 billion cedis spent on utilities.

Mr. Bagbin described the Budget statement as a mere ritual of rhetoric, adding that proposed re-denomination of the cedi next July should have been captured in the 2007 Budget.

The Minority Leader said the figures for the "Golden Jubilee" Budget were rather low and called for the development of long-term vision for the nation.

Making an intervention, Mr. Felix Owusu-Agyapong, Majority Leader and Minister of Parliamentary Affairs, said the timing for the budget was right, and the new changes introduced into the Budget made it a good budget.

He said the problem was the shortage in receipts for the various sectors, Mr. Owusu-Agyapong called on the fellow legislators and Ghanaians to believe in themselves and empower the various parliamentary committees to work to achieve the programmes outlined in the Budget. Below are some highlights of the Budget:

Headline inflation declined to 10.5 per cent at the end of the October 2006 from 14.8 per cent at the end of December 2005.

Gross Domestic Product (GDP) growth rate projected at 6.2 per cent based on data through September 2006.

Interest rates generally declined over the ninth month period to September 2006 but the main policy rate, the Bank of Ghana Prime Rate remained unchanged at 14.5 per cent since January 2006 when it was reduced by 1.0 percentage point to the current level.

The Cedi depreciated by 9.5 per cent against the British pound and 7.8 percent against the Euro, while a moderate depreciation of 09 per cent was recorded against the US dollar.

Provisional estimates of the Balance of Payments (BOP) recorded a modest surplus of 77.7 million dollars compared to a deficit of 195.8 million dollars in the same period of 2005.

Overall fiscal deficit reduced from 6.7 per cent of GDP in 2003 to 2.3 percent of GDP in 2005.

Provisional fiscal out-turn for January to September 2006 shows total receipts of 31,292.7 billion cedis as against the out-turn of 23,723.7 billion cedis registered for the same period during 2005. Provisional out-turn for total payments for the first three quarters of 2006, comprising statutory and discretionary payments was 31,929.7 billion cedis as against 23,723.7 billion cedis for the corresponding period 2005.

Ghana's total medium debt and long term external debt at the end of 2005 stood at 6,347.9 million dollars. This amount had been reduced significantly to 2,143.79 million dollars by the end of September 2006 as a result of a 66 per cent debt reduction under the Multi-lateral Debts relief initiative (MDRI).

The BoG accumulated a net international reserve of 263.5 million dollars compared with 7.5 million dollars during the same year in 2005. The agricultural sector is projected at 5.7 per cent indicating a 0.9 percentage shortfall against the target of 6.6 per cent. Industrial growth is projected at 7.3 per cent with electricity and water as the major contributing sub-sectors.

In the mining sector, gold is projected to register a growth of about 9.0 per cent.

The manufacturing sector growth is projected at 4.2 showing a slowdown from the 5.0 per cent recorded in 2005.

The construction sector projected to grow at 8.2 per cent. Credit to the private sector went up from 77.4 per cent a year ago to 81.6 per cent for the year.

Employment went up by 12.5 per cent.

The establishment of a Fair Wage Commission to administer the new Comprehensive Pay Structure.