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08.01.2008 Business & Finance

Parliament Approves GH¢1.84bn •For Debt Servicing

By Daily Guide
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FOLLOWING THE presentation of the budget statement for this year by the Minister of Finance and Economic Planning, Kwadwo Baah-Wiredu, parliament has approved the required GH¢1,846,310,737 billion to meet government's financial obligations.

After carefully examining the estimates contained in the statement, the Finance Committee of the house recommended the allocation of the money for this year's statutory payments.

The amount would mainly be used to service external debts, domestic interest, district assemblies' Common Fund and transfers to households, education trust fund, contingency and other related funds.

Before approving the budget statement, the committee observed that the assumptions for this year on Principal on External Debt were projected as total debt repayments due as in Aid and Debt Management Division (ADMD) database plus 25 percent of government guaranteed loans, and converted at an assumed average exchange rate.

Interest on external debt is also projected as total interest due as in ADMD database. It assumes interest on all government loans plus 25 percent of government guaranteed loans and converted at an assumed path for exchange rate.

The committee observed that domestic interest was derived from the Bank of Ghana database on the interest on the existing stock of all domestic debt, including interest on Tema Oil Refinery debt taken over by Government, and all revaluation stocks.

The district assembly Common Fund was calculated at 7.5 percent of total tax revenue, minus all tax refunds and exemptions.

On the other hand, pensions and gratuities are projected and calculated by the Controller and Accountant General's Department whilst social security projections are based on outturn from last year and adjusted for growth in wages and salaries.

Payments to the National Health Fund will be 2.5 percent of projected levy on goods and services as stipulated in the NHIS, plus 2.5 percent of estimated contributions to SSNIT.

The Ghana Education Trust Fund will also be calculated at 20 percent of Value Added Tax(VAT) receipts less VAT refunds and exemptions and projections for the Road Fund based on calculations from the Ministry of Energy, on assumption of a levy of GHp 6 per litre of fuel based on demand.

Petroleum related fund comprises Energy Fund, Exploration and Stock Levies.

To cater for unforeseen obligations, the committee also recommended the provision of GH¢117 million for possible obligations the government may encounter in the course of the year.

The money will also help government to readily deal with any unanticipated emergencies that may crop up in the course of the year, for which no specific allocation was made in the budget.

By Patrick Ampong-Baidoo

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