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29.06.2005 Business & Finance

Inflationary impact almost gone - Minister


Accra, June 29, GNA - Deputy Finance Minister, Kwaku Agyeman-Manu on Wednesday said that the inflationary impact of the 50 per cent hike in petroleum prices had almost disappeared through the pursuit of prudent economic policies. Citing improved macro-economic indicators in recent weeks, he said, the persistent decline in the rate of inflation was an indication of the slow down in food price inflation.

Food price inflation fell from a monthly increase of 4.4 per cent in February to 3.3 per cent in April. Besides there was also significant drop in food price inflation from monthly increases of 6.8 per cent in February to 0.6 per cent in April. Mr Agyeman-Manu was speaking during a ceremony in which the Graphic Communications Group Limited (GCGL) and the Twifo Oil Palm Plantation (TOPP) presented over nine billion cedis as dividend to the Government for their last year's operations. The GCGL handed more than three billion cedis while TOPP gave six billion cedis.

The Minister said the significant improvement in the economy was indicated by in the Bank of Ghana's decision to cut its prime rate from 18.5 per cent to 16.5 per cent and to reduce its secondary reserves requirement from 35 per cent to 15 per cent. This would make more funds that are loanable available to the private sector from the commercial banks. In addition, credit extended to the private sector by the deposit money banks had also seen significant increase.

Mr Agyeman-Manu also touched on the reductions in corporate and withholding tax, saying it was a demonstration of the Government's commitment to create conducive environment for the business sector to better cope with the challenges that they might face. He said these reductions while boosting business would also considerably lead to the loss of revenue hence the need for the Government to double efforts in enhancing revenue mobilization with non-tax revenues.

Government, therefore, would spare no effort in making sure that it realised its projected total dividend of 250 billion cedis from its investments in 2004. He appealed to all State Owned Enterprises and Joint Venture Companies not to delay dividend payments to the Government. Mr Agyeman-Manu lauded the exponential growth in the dividend payment of GCGL and TOPP, saying it was a demonstration of the good corporate governance in the companies.

Professor Kwame Gyekye, Board Chairman of GCGL, said that despite the keen competition in the media industry, the company had continued to make significant strides buoyed by advertising revenue. GCGL operating profit grew from 12.6 billion cedis in 2003 to 16.6 billion cedis in 2004, representing 30 per cent growth. The dividend of three billion cedis is an increase of 500 per cent over the 500 million cedis paid for 2003. Prof Gyekye said the outlook of performance for the year was bright, giving the generally favourable political and economic atmosphere now prevailing in the country.

Mr Abdul Malik Amin, Managing Director of TOPP, appealed to the Government to expedite action on divestiture of its remaining 40 per cent share in the Company. He also asked Government to play an active role in the acquisition of land for expansion and referred specifically to the Buabin Project, which he said had been on the drawing board for more than five years. Mr Amin said theft of palm fruits was another hindrance working against the smooth operations of the plantations, saying that the Company had to spend over 60 million cedis monthly on additional security operations on the plantations.