Local currency remains relatively stable

Accra, Nov.4, GNA - The Minister of Finance and Economic Planning, Mr Yaw Osafo-Maafo has said that the local currency, the Cedi has remained relatively stable on the foreign exchange market.

He said its volatility has also been reduced despite the spillover effects of the Euro and dollar exchange rate movements on the international foreign exchange market.


Mr Osafo-Maafo said this in Parliament on Tuesday when he presented the Review of the Economic Performance for the 2003 Financial Year at which he explained the Exchange rate development and the Fiscal Performance of the economy.


He said on the international market, the cedi depreciated by only 3.50 per cent against the dollar since the beginning of the year, against the pound sterling, the cedi depreciated by 6.8 per cent while it depreciated by 13.6 per cent against the Euro.


On the Financial Performance, he said total revenue and grants for the period amounted to 8,825.1 billion cedis against a target of 9,036.3 billion cedis indicating a shortfall of 211.2 billion cedis mainly as a result of unrealised 305.6 billion cedis in project grants and delays in the implementation of new revenue measures including the national Health Insurance Levy.


Mr Osafo-Maafo said the outturn for tax revenues of 6,849.2 billion cedis was higher than the target of 6,320.3 billion cedis and the reasons for the over performance included among other factors the improvement in tax administration.

He said with direct taxes, including PAYE and company taxes were 2,180.5 billion cedis against a target of 1,985.9 billion cedis showing an over-performance of 194.6 billion cedis.


The Value Added Tax (VAT) receipts amounted to 1,836.2 billion cedis compared to the target of 1,651.8 billion cedis showing an over-performance of 184.3 billion cedis.


He said this was mainly on account of a strong performance of import VAT, which exceeded the target by 211.5 billion cedis while domestic VAT outturn was 562.2 billion cedis, showing an under-performance of 27.2 billion cedis.


Import duties over-performed by 177.2 billion cedis recording 1,315.2 billion cedis against a target of 1,138.0 billion cedis, non-tax revenue collections of 198.9 billion cedis was lower than the projected figure of 229.5 billion cedis by 30.6 billion cedis.


Mr Osafo-Maafo said total grants including Highly Indebted Poor Countries (HIPC) relief from multilateral donors amounted to 1,777.0 billion cedis, a shortfall of 103.3 billion cedis compared to the projected amount of 1,880.3 billion cedis for the period, adding that the shortfall was on account of project grants that fell below the projected amount by nearly 306 billion cedis.

He said on the other hand, HIPC assistance from multilateral development partners amounted to 449.6 billion cedis against a projection of 399.0 billion cedis, the higher than projected outturn was the result of an early conclusion of negotiations on debt relief with some of the development partners.


The Minister said programme grants were also higher than the target of 775.3 billion cedis by 151.7 billion cedis as a result of earlier than expected disbursement of some of the grants.


He said as a result of the delayed passage of the NHIS, the revenue expected did not materialise, furthermore, late implementation of the auction regime in the timber industry led to shortfalls in the other revenue measures.


On Statutory payments, the Minister said amortization of external debt was 718.3 billion cedis against a targeted amount of 1,484.0 billion cedis with the difference of 765.6 billion cedis mainly debt relief resulting from HIPC savings.


External interest payments for the period amounted to 353.7 billion cedis against a budgeted amount of 497.3 billion cedis with the savings of 143.6 billion cedis attributable to the difference between the amount due for payment and the actual payment effected, reflecting the impact of HIPC relief assistance.

The Domestic interest payments of 1,523.2 billion cedis were 448.6 billion cedis lower than the budget of 1,971.8 billion cedis. These were mainly attributed to the lower than programmed net domestic borrowing by Government between January and July 2003.


Mr Osafo-Maafo said the Road Fund and other petroleum-related funds recorded a total of 296.6 billion cedis showing an under performance of 82.4 billion cedis and this shortfall reflected lower than expected demand for various petroleum products.


Transfers to households (pensions, gratuities and social security) amounted to 528.6 billion cedis against a budget of 525.0 billion cedis. The over expenditure was due mainly to increased payments for gratuities and social security resulting from salary increases granted during the period.