Ghana Targets 6.5% Growth for 2007

By Eddyson Lugangwa Posted 23 November 2006 @ 03:37 pm EET     Print     Reprint     E-Mail     Comments

Accra (IBTimes.com) - The Ghanaian government has unveiled a 2007 Budget and Financial Statement that aims at achieving strong economic stability and 6.5 percent annual growth.

In a forward to the "Golden Jubilee Budget" presented to parliament on Thursday by finance and economic planning minister, Kwadwo Baah-Wiredu, President John Kufuor noted that economic growth had exceeded targets for three consecutive years.

According to him, the economic growth for 2006 was 6.2 percent, slightly higher than the 6.0 percent target.

Kufuor said the new budget would promote growth and stability for all, adding that it would be used as the beginning of the solution to problems of salaries in the public sector.

Government would set up a Fair Wages Commission to oversee the implementation of the new programme, he said.

But the Ghanaian leader noted that despite gains made by the government, there were problems at the labour front, resulting partly from a distorted public sector salary structure, which was also poorly administered.

The government would therefore, use the new budget to begin the implementation of a new comprehensive public sector salary reform that emphasised equal pay for equal work.

"The broad objective is to aim for wage increases in line with productivity gains, cost effectiveness and efficiency," Kufuor said, adding that the ongoing public sector reforms would be sustained to boost private sector development through an enhanced public services delivery, and to deepen the public-private sector partnership for accelerated growth.

"I am, therefore, appealing to the nation and all its sectors to hold fast and rally together so that we pursue a collective vision in the belief and confidence that Ghana will succeed in becoming a middle income country by 2015," he said.

Kufuor said the sacrifices by the nation over the past couple of years had yielded the desired positive results, with the economy now resilient, even in the face of rising crude oil prices, adding that government remained committed to polices that brought the nation this far.

"On the eve of our 50th anniversary as a nation, I am happy that our economy is vibrant and the aspiration of attaining the status of a middle-income country in the next decade is within our reach," he stressed.

Baah-Wiredu said inflation declined to 10.5 percent at the end of the October 2006 from 14.8 percent at the end of December 2005 and GDP growth rate was projected at 6.2 percent based on data through September 2006.

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

The cedi, the local currency, depreciated by 9.5 percent against the British pound and 7.8 percent against the euro, while a depreciation of 9 percent was recorded against the US dollar.

Baah-Wiredu said provisional estimates of the Balance of Payments (BOP) recorded a modest surplus of $77.7mn compared to a deficit of $195.8mn in the same period of 2005 and overall fiscal deficit reduced from 6.7 percent of GDP in 2003 to 2.3 percent of GDP in 2005.

Provisional fiscal out-turn for January to September 2006 showed total receipts of 31 292.7bn cedis ($3.4bn) as against the out-turn of 23 723.7bn cedis ($2.6bn) registered for the same period during 2005.

Baah-Wiredu said Ghana's total medium debt and long term external debt at the end of 2005 stood at $6.3bn.

But this had been reduced significantly to $2.1bn by the end of September 2006 as a result of a 66-percent debt reduction under the Multi-lateral Debts relief initiative (MDRI).

The minister said the BoG accumulated a net international reserve of $263.5mn compared with $7.5mn during the same year in 2005.