Finance Minister, Dr. Kwabena Duffuor said on Thursday that the downturn in the advanced economies was expected to have negative effect on Ghana's exports and thus, its external balance.
“Weak demand for exports and weak commodity prices imply less export revenue,” the Minister said, when he presented the NDC government's maiden budget to Parliament.
In addition, he said, expected shortfalls in remittances, a slowdown in donor support and private capital inflows as a result of the global recession were all likely to have negative impact on the Ghanaian economy in general and on public finances in particular.
The Minister said the trend called for vigilance and careful monitoring of the global situation.
Touching on the performance in 2008, the Minister said the budget targets were not attained.
Government set a real GDP growth of at least 7.0 per cent; an end period inflation rate of between 6.0 and 8.0 per cent; an average inflation of 7.0 per cent; accumulation of gross international reserves equivalent to at least three months of import cover; and an overall budget deficit including divestiture of 4.0 per cent of GDP and a deficit excluding divestiture of 5.7 per cent of GDP.
The provisional results for 2008, he said, indicated real GDP grew by 6.2 per cent; inflation rate as at end December 2008 was 18.1 per cent; average inflation for the year was 16.5 per cent; gross international reserves reduced to the equivalence of 1.8 months of import cover for goods and services; and the overall budget deficit excluding divestiture hit a high of GH¢2,557.6 million, equivalent to 14.9 of GDP.
However, he said, divestiture receipts, reduced the deficit to GH¢1,982.9 million, equivalent to 11.5 per cent of GDP.
Dr Duffuor said in order to quickly stabilise the economy, the Ministry of Finance and Economic Planning intended to deepen collaboration with the Bank of Ghana to ensure better formulation and implementation of fiscal and monetary policies.
The Minister said provisional figures indicated that real GDP grew by 6.2 per cent in 2008.
The sectoral components of the growth were as follows: the agriculture sector, the largest among the three sectors in the national accounts grew by 4.9 per cent against a target of 5.0 per cent and the industrial sector grew at 8.3 per cent compared to a target of 9.8 per cent.
With the exception of construction, which exceeded the growth target of 13 per cent, all the industrial sub-sector components registered lower than
The services sector grew by 6.9 per cent compared to 10.0 per cent in 2007. This was the result of a less-than-expected growth in wholesale and retail trade and commodity, social and personal service; and producers of private non-profit services.
He said provisional fiscal outturn for 2008 indicated that total receipts, comprising domestic revenue, grants and other receipts amounted to GH¢9,538.2 million, equivalent to 55.4 per cent of GDP.
The outturn was 34.2 per cent higher than the budget estimate of GH¢7,107.2 million and 56.8 per cent higher than the outturn for 2007.
The Minister said domestic revenue, made up of tax and non-tax revenue totalled GH¢4,802.4 million. This amount, which was equivalent to 27.9 per cent of GDP was also 0.8 per cent higher than the budget estimate of GH¢4,763.2 million and 31.5 per cent increase over the outturn for 2007.
Tax revenue amounted to GH¢4,299.5 million, equivalent to 25.0 per cent of GDP, against a budget estimate of GH¢3,973.8 million, equivalent 24.4 per cent of GDP. This outturn was 29.8 per cent higher than that recorded in 2007.