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23.08.2005 Business & Finance

Donor inflows were slow - Minister


Accra, Aug. 23, GNA - Donor support to the 2005 budget has been slow with only a third of what had been pledged flowing into the country as at June this year, Finance and Economic Planning Minister, Mr Kwadwo Baah-Wiredu said on Tuesday.

Speaking at the first of the renewed Meet the Press series, the Minister said 81.75 million dollars out of a total of 285.33 million dollars promised by development partners had so far been received under the Multi Donor Budget Support (MDBS) Initiative.

The Government and donors introduced the MDBS process to make the inflows of external aid more predictable to enhance planning. Mr Baah-Wiredu explained that although the Government had negotiated with its partners to receive the base tranche and two-thirds of the performance tranche within the first half of the year, the delay of the disbursement was mainly due to the inability of the Boards of the World Bank and the African Development Bank to meet as scheduled. However, the Minister said, the development partners had made good their base tranches to the country.

The country is expecting a one-off disbursement from the World Bank and African Development Bank totalling 155 million dollars, together with Germany, which was yet to disburse its base and the two-thirds of the performance tranches of seven million dollars.

"In all we are expecting about 179.25 million dollars by mid-September 2005," the Minister said.

Mr Baah-Wiredu said the delayed and slow inflow of external development and budgetary assistance had negatively impacted on the overall fiscal performance. However, he added, cautious policies had contributed to the general macroeconomic stability for the first half year.

Overall budget balance for the first half showed a deficit of 1.4 trillion cedis, representing 1.5 per cent of the Gross Domestic Product against a targeted deficit of 836.5 billion, equivalent to 0.9 per cent of GDP.

Domestic primary balance recorded a surplus equivalent to 1.03 per cent of GDP against targeted surplus equivalent to 1.66 per cent of GDP. He said the economy remained resilient against the backdrop of increasing world crude oil prices with headline inflation declining to 14.9 per cent in July on a year-on-year basis.

On the controversy of per capita income, Mr Baah-Wiredu said there was the need for some clarification on the issue for all to come to an understanding.

He said preliminary reports indicated that the country's GDP had been understated by about 20 to 30 per cent.

"If we calculate this based on our current GDP, population and exchange rate we will all realise that our current per capita is higher than what we know it to be now," the Minister emphasised. He said: "If we take all these into consideration we will understand why the President said our per capita income is about 600 dollars."