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13.04.2006 Business & Finance

Inflation In Single Digit

Inflation In Single Digit

Ghana's economy has recorded a single-digit inflation, the first since May 1999.

The Consumer Price Index (CPI) eased 2.2 percentage points from 12.1 per cent in February to 9.9 last month.
Although in May 1999 inflation was 9.4 per cent, it rose sharply to 40.9 per cent in January 2001.

The Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu, who announced this, said the single digit, which had been targeted for a long time, should help the private and public sectors to plan.

He was speaking in Accra when his ministry took its turn at the Meet-the-Press series yesterday.

He said coupled with generally improved economic conditions in the country, the economy posted a positive outlook, which should accelerate growth, based on the investment strategy and reforms that underlined the Growth and Poverty Reduction Strategy Phase II.

He said with the efficient use of the fiscal space created by the Multilateral Debt Relief Initiative and the implementation of prudent policies, Gross Domestic Product (GDP) growth could be raised into the range of seven to eight per cent needed to achieve the Millennium Development Goals (MDGs).

Reviewing the economic state of the country, the Finance Minister said Ghana's economy had shown resilience in the face of record-high crude oil prices, a vindication of the prudent use of resources in the last five years.

That feat, the minister explained, was also confirmed by the various findings of surveys and research studies by reputable international authorities which had designated Ghana an attractive destination for investment.

Mr Baah-Wiredu said in spite of the slowdown in the growth of money supply, credit to the private sector continued to grow, reaching 14.9 per cent of GDP by December last year, from 13.1 per cent the same period in 2004.

He said having improved the macroeconomics fundamentals of the economy, “the economy is now poised to make the transition from stability to high growth”.

Mr Baah-Wiredu said a presidential assent to an amendment of the Internal Revenue Act, 2000, Act 592, would grant various tax exemptions and provide incentives for companies operating within the venture capital industry.

The aim, he said, was to encourage and recognise private sector participation in the Venture Capital funds management to create employment and wealth.

The exemptions also included the abolition of income tax on the minimum wage, which, the minister explained, would cost the country about ¢293 billion in revenue by the close of the year.

Those exemptions would mean widening the tax net to rope in more informal sector operators to offset the loss in revenue, he added.

Mr Baah-Wiredu said the ministry was in close consultation with the Ghana Union Traders Association (GUTA) and other stakeholders to introduce the flat-rate Value Added Tax (VAT) for informal traders in the distribution sector by August this year.

“Another component of the amendment is the abolition of the penalty component of the price at which vehicles forfeited to the state are disposed of,” he said.

Previously, the price included duties, taxes and penalties.
Mr Baah-Wiredu said the reduction was intended to make vehicles affordable to lower income earners.

On corruption, the minister said the government would keep its eyes on all sectors of the economy to block any financial leakage.

He said the nation must ensure the maximum use of all resources at its disposal and the government would not watch unconcerned for misappropriations and the squander of national resources.

“We want to open our eyes at all levels to block the leakage so that we can get the best from our resources,” Mr Baah-Wiredu said.

He said the recent revelations of financial impropriety in certain public and private sector institutions, such as La Palm, were not ordinary but deep-rooted syndicates of shady transactions that the government was determined to unravel.

“These are not ordinary debts. They are the fallout of a sophisticated network of shady transactions which have cost some of our state-owned financial institutions considerable losses,” the minister stated.

He explained that while the government would perform its motherly responsibility of ensuring that the smooth operations of those institutions remained undisturbed, it would adopt steps to unveil the perpetrators behind those cases and apply the law accordingly.

Mr Baah-Wiredu concluded with a call on the people to remain focused and join hands to build the nation.
“There is no nobility in retreat.

Let us stay focused and we can and will achieve the desired result for the benefit of ourselves and that of our unborn generation,” he said.