The National Democratic Congress (NDC) government presented its maiden budget to Parliament on Thursday, announcing plans to drastically cut expenditure but at the same time promote education and employment in line with its manifesto promises.
Presenting the budget to Parliament, Finance Minister Kwabena Duffuor said the government aimed to cut its fiscal deficit to 9.4 percent of gross domestic product (GDP) by the end of 2009, down from 14.9 percent at the end of 2008.
While admitting that the cuts in spending might not be popular with most Ghanaians, Dr Duffuor said that was the only option to ensure that macroeconomic instability did not hurt the country's poverty reduction and growth agenda.
Ghana's total debt now amounted to $8 billion dollars, 51 percent of it owed to foreigners.
"Over the medium term we plan to bring the deficit down to 3-4 percent of GDP," Dr. Duffour said.
The government is also forecasting the economy to grow by 5.9 percent in 2009, down from a provisional growth rate of 6.2 percent last year. The projection is in line with the Bank of Ghana's February estimate of 5-6 percent growth for 2009.
Inflation is also projected to close the year at 12.5 percent and gross international reserves of more than two months of import cover for goods and services.
Dr. Duffuor said the government would provide local industries incentives to create jobs.
Government also announced the creation of a special fund to enable it to repay the $750 million Eurobond, which was issued in 2007 and is due for repayment in 2017.
Revenue for 2009 fiscal year is projected at GH¢9,793.1 million, equivalent to 45.8 percent of GDP. This is made up of total revenue of GH¢5,935.1, grants of GH¢1,301.0 and other receipts of GH¢2,557.0.