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10.03.2009 Business & Finance

Govt asks IDA for 3- year lump-sum

By myjoyonline

Ghana is seeking $300 million from the International Development Association, an affiliate of the World Bank to support this year's budget.

Dr. Kwabena Duffuor, Minister of Finance, placed the request before the World Bank Vice President, Obiageli Ezekwesili, who paid a courtesy call on him yesterday.

He said in the face of the global financial crisis and Ghana's huge budget deficit, the country needed the money to implement programmes and policies earmarked in the budget.

"We need this advance credit from your outfit to ensure that economic targets set in the 2009 budget statement presented to Parliament are achieved," he said.

The International Development Association (IDA) provides interest -free credits to the world's least developed countries.

On the average, Ghana receives $100 million yearly from the IDA, and by demanding $ 300 million in advance, Ghana is accessing three years of credit from the IDA.

Dr. Duffour said this year's budget the first by the administration, was tailored to deal with budget deficit and also speed up the pace of the country's economic development.

The government, he said, was poised to rationalising its expenditure to ensure that the budget deficit was reduced from 14.9 per cent as at the end of December, 2008 to 9.4 per cent at the end of 2009.

"It is for this reason that we need your assistance to prune the budget deficit," he said.

Dr. Duffour said the down turn in the advanced economies was expected to have negative effect on Ghana's exports, adding that weak demand for exports and weak commodity prices imply less export revenue.

"In addition, expected shortfalls in remittances, a slowdown in donor support and private capital inflows as a result of the global recession, are all likely to have a negative impact on the Ghanaian economy in general and on public finances in particular," he said.

Quoting figures to support his argument, he said statistics available at the Ministry of Finance shows that remittances at the end of January, this year, stood at $ 115 million as against $165milIion recorded during the same period last year.

"If this trend continues, the country would experience a shortfall in remittances amounting to $600 million. This, therefore, calls for vigilance and careful monitoring of further developments in the World economy so that corrective actions could be taken quickly when the need arises," he said.

The World Bank Vice President on her part, expressed the bank's readiness to grant the advance credit adding that "you must ensure that the timing is right to enable us to go through the procedures."

She said the IDA had been a trusted partner in Ghana's efforts to maintain its reform course, increase the transparency of public finances, analyse challenges and invest in key sectors.

"A critical element in IDA's support has been a strong focus on poverty reduction, health and water sectors," she said.

She said the bank was determined to support structural reforms earmarked in this year's budget and also stabilise the economy.

The Vice President said the bank over the years had learnt lessons from Ghana's economic development policies and stressed the need for it to be sustained.

She said with the current economic crunch there was the need for the government to manage the economy wisely in order not to erode gains made in the past.

The Vice President said her mission in Ghana was to deepen relations between the Bank and Ghana.