Accra, Feb. 24, GNA - The Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu said on Thursday that the nation's public finances are in a much healthier position today than they were some four years ago, with a sharp reduction in the fiscal deficit and the domestic and external debt burdens.
"Overall revenue performance has improved and creating the scope for increasingly larger public spending," he said in his first budget since his appointment.
"The macroeconomic targets we set ourselves over the period were, in the main, achieved and have led to a stable economic environment, with reduced inflation, lower interest rates, a relatively stable currency, and a strong external reserves position."
Mr Baah-Wiredu said the President set the tone for "Positive Change Chapter Two" when he stated during his recent State of the Nation Address that a businesslike approach would be adopted in the governance of this country and in the management of its economy.
"The adoption of the terminology "Ghana Incorporated" is, therefore, meant to keep all of us citizens firmly focused on the business of accelerated growth by inspiring the public sector, the private sector, and organized labour to work together towards the singular objective of national development."
He said the policy framework and the successive Budgets implemented during the NPP's first term of office brought significant achievements.
These achievements are not mere statistics but real changes that would lead to fundamental transformation of the economy and the lives of the people, he said. " Surely, these achievements must have convinced the people of Ghana to renew the mandate of his Excellency the President to govern the nation for a further four years."
Mr Baa-Wiredu said a number of measures have been undertaken to reform public expenditure management through better planning and budget formulation, the setting of realistic and achievable ceilings, clear spending priorities, and enhanced monitoring of disbursements.
This has introduced transparency and accountability in the implementation of the Budget and has resulted in better cash management and significant plugging of loopholes that made public finances susceptible to waste and financial malpractice in the past.
He commended the Revenue Agencies, saying their staff have been motivated and their operations are now more efficient and effective. Revenue has increased from A24.4 trillion, representing 16.3 percent of GDP of A227,150 billion at end of 2000, to an all time high of A217.4 trillion, equivalent to 21.8 percent of GDP of A279,800 billion at the end of 2004.
The Non-Tax Revenue Unit of the Ministry of Finance and Economic Planning is now better resourced, leading to enhanced mobilization of non-tax revenue.
He said focused and effective expenditure reforms have led to low and sustainable levels of fiscal deficits and lower net domestic financing of the Budget, thereby enabling Government to reduce the domestic debt from about 30 percent of GDP at the end of 2000 to 17.6 percent of GDP at the end of 2004.
Mr Baah-Wiredu said two policy documents, the Ghana Poverty Reduction Strategy (GPRS), and the 2000 NPP Manifesto drove Government's declared programme of Positive Change for the 2001 to 2004 period. The five priority areas selected by Government were used to operationalise the implementation of the programme in the effort to transform the economy. The Presidential Special Initiatives also gave further impetus to the economic agenda.
"Mr. Speaker, I am proud to state that with the inspired leadership of His Excellency the President and the firm and competent stewardship of my Honourable friend and predecessor as Minister of Finance and Economic Planning, this nation has been able to break the myth of election year financial overspending and economic mismanagement. The economy remains in sound shape despite the unforeseen fiscal shocks, and the decision of Government to mitigate the effects of the full market cost of fuel prices in the last year to the society. "
He said "our Development Partners would take note that Government has been able to avoid slippages and kept to prudent economic policies to enable us sustain our current stable economic environment.
"This should enable us maintain the excellent and fruitful dialogue through the Multi-Donor Budgetary Support Framework which, for the first time in our country's history, has yielded in the last two consecutive years, 100 percent disbursement of donor pledges to support our budget in the implementation of the GPRS. We kept our part of the bargain and we are grateful they kept their part as well."
Mr Baah-Wiredu said the government welcomes the transparency in the dialogue with our Development Partners and the ongoing effort at harmonizing the various development policy frameworks for the accelerated execution of our Growth Agenda. Our declared intention to participate in the Paris Conference from February 28th - 3rd March shows our commitment to this harmonization process.
The Minister noted that one pointer to our positive economic achievements is that for the first time the Government subjected the nation to sovereign credit ratings by credible international ratings agencies. Standards & Poors gave a rating of B+ while Fitch gave a rating of B with a positive outlook in 2003 and again in 2004, after review.
"One other significant development on the economic front in 2004 was Ghana being one of the sixteen eligible countries out of the 62 pre-qualified countries to benefit from the first tranche of US$1 billion initial funding in the Millennium Challenge Account."
The Minister said in 2001 the President took the bold decision to opt for the HIPC initiative and Ghana reached the completion point of the programme within a record time of thirty months.
"The reason was that we sustained policy reforms. The implications of these were the cancellation of approximately US$1.5 billion (=A213.65 trillion) of Ghana's stock of debts in nominal terms and a total debt relief from Ghana's creditors amounting to $3.5 billion (=A231.85 trillion) in nominal terms. Ghana will save approximately $230 million (=A22.093 trillion) annually in debt service cost in the next twenty years. Funds from HIPC savings are being invested in poverty reduction programmes all over the country."
He repeated that the net effect of this initiative is that our debt burden is reduced, and more resources become available to us for the financing of development projects from the HIPC account at the Bank of Ghana on terms agreed.
Mr Baah-Wiredu reiterated the priority areas of the NPP Development Agenda for the coming years as: Human resource development through education and improved health service delivery, and other related services; Private sector development; envisaging agriculture based on human development, infrastructure by government in partnership with the private sector; and Good Governance
"The Budget for 2005 is formulated around these three priority areas, which cut across the five priorities in the GPRS. The Budget provides the macroeconomic underpinnings for continued progress to achieve the medium-term objectives set out in the GPRS. "