Government to spend on growth oriented programmes in 2011 - Dr Duffuor

Accra, Oct. 26, GNA - The Government would focus on growth-oriented social intervention programmes as priority areas in 2011 to improve the lives of the citizenry, Finance and Economic Planning Minister, Dr Kwabena Duffuor, announced on Tuesday in Accra.

The interventions which would be introduced in the 2011 National Budget and Economic Policy Statement, would focus on programmes in education, health, infrastructure, road, energy, housing and rail sectors to accelerate economic growth, he added. Dr Duffuor was speaking at a forum which was organised by the Ministry of Finance and Economic Planning for stakeholders to make inputs into the 2011 National Budget Statement and Economic Policy. He identified continuous subsidies to utility companies, mounting wage bill and earmarking of funds which create rigidities in the budget as some structural challenges that threatened acceleration of the pace of development.

"The impact of all of these is that there is a very limited resource for effective service delivery and infrastructure development which the country critically needs," he said. On the revenue side, Dr Duffuor said the issue of tax evasion, exemptions, non-compliance to the tax regime, as well as limited contributions of the informal sector remained a challenge to tax management.

He described 2011 as a critical year that heralded the beginning of a new era marking the production of oil in commercial quantities. "It is our expectation that business will take full advantage of this opportunity and devise innovative ways of creating sustainable jobs and increased incomes which will act as a major catalyst for the much needed economic activities that spur sustainable growth and development," he said.

In a speech read on his behalf, Mr Asare Akuffo, President of the Governing Council of the Private Enterprise Foundation (PEF), suggested that government should waive the Value Added Tax and National Health Insurance Levy on imported information technology equipment and services that are proved to be related to innovations in the national payments system and the regulatory framework to motivate banks to further reduce interest rates.

On cost of credit, he proposed a reduction in government's domestic borrowing to less than 10 per cent of gross domestic product in order to drive treasury bill rates further down.

Mr Akuffo, who is also the Managing Director of HFC Bank, said government should implement the street-naming and house address project to enable banks to trace loan defaulters. He called on the government to allocate funds annually for targeted banks at about five per cent rate for on-lending to sectors capable of influencing economic growth. Mr Akuffo suggested that a tax incentive system should be given to banks that were ready to lower their lending rates at 10 per cent to growth-oriented sectors of the economy. 2