Gov't Records Budget Deficit in 1st Half Year

The government's budget has recorded a provisional deficit of ¢1,512.5 billion, (1.56 percent of GDP) compared with a programmed deficit of ¢772.1 billion, the Governor of the Bank of Ghana, Dr. Paul Acquah has said.

He said that the domestic primary balance however recorded a surplus of ¢1,293.3 billion, (1.34% of GDP) close to the budget target of ¢1,348.8 billion, (1.40 % of GDP). Net domestic financing of the budget amounted to ¢91 1.3 billion in May and ¢1,250.9 in June and compares with a programmed net domestic repayment of ¢237 billion at the end of June 2005.

At a press conference in Accra, the Chairman of the Monetary Policy Committee said the provisional balance of payments figures indicate that by the end of the first half of 2005, total merchandise exports amounted to $1,642 million, 20.0 % above what was recorded for the first half of 2004. "After topping 700,000 tons in 2004, cocoa production in the 2004/2005 is estimated at some 550,000." He said export earnings from cocoa for the first half of the year stood at $500.4 million, compared with $564.9 million for the first half of 2004.

Merchandise imports for the first half of 2005 amounted to $2,301.0 million, 13.0 % above 2004 levels, resulting in a trade deficit of $659 million, similar to the $670.5 million recorded last year. Oil imports amounted to $366.5 million, 11.5 % above the level recorded for the first half of 2005. The current account showed a deficit of $48.7 million, compared with a surplus of $59.7 million in the first half of 2004.

Private inward remittances transfers received from NGOs, religious groups, individuals etc. channeled through the banks and finance companies, amounted to $1,630.9 million for January-May 2005, compared to $1,027.5 million in January-May 2004. This, according to the governor, is a 58.7 % increase above last year's level. Of the total remittances received, 30.0 % (i.e. $483.5 million) was from individuals.

On the foreign exchange front, total purchases and sales of foreign exchange by deposit money banks amounted to $2.9 billion by June 2005 and compares with $1.9 billion, representing 53.0 % over last year's figures. The cedi exchange rate appreciated in nominal and real terms against the British Pound and the Euro, while remaining stable against the US dollar.

Gross international reserves which was $1.73 billion at the end of last year, was at $1.47 billion by June this year, equivalent to 3.0 months of imports of goods and services.

Meanwhile, Paul Acquah revealed that the debt-servicing ratio of the country is 5% of GDP.

Domestic public debt ratio is however higher and close to 17 %, while interest on the debt is 3% of GDP.