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General News of Thursday, 5 February 2004 |
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HIGHLIGHTS OF THE 2004 BUDGET STATEMENT
The Hon. Minister for Finance And Economic Planning, Mr. Yaw Osafo-Maafo today presented The 2004 Budget Statement And Economic Policy Of Government to Parliament in Accra under the theme: Releasing Energies Of Individuals And Businesses Towards Sustainable Growth
INTRODUCTION:
- Creating a more friendly environment to support business
- Tax reliefs to individuals and businesses
- Strengthening and streamlining existing revenue mobilization strategies to maintain robust revenue collection
- Reduction of import duties and removal of VAT on selected inputs
DEVELOPMENT PRIORITIES
- President’s priorities cornerstone for transformation of society viz:
- Infrastructure development
- Modernisation of Agriculture based on Rural Development
- Delivery of enhanced Social Services
- Strengthening of institutions of Good Governance
- Strengthening the Private Sector
OVERVIEW OF PERFORMANCE IN 2003
Developments in the West African Monetary Zone (WAMZ)
- Met 3 out of 4 convergence criteria, the best in the WAMZ countries
- Location of the Headquarters of West African Central Bank in Accra
OVERVIEW OF PERFORMANCE IN 2003
- Real GDP growth of 5.2 percent as against target of 4.7 percent over performing the medium term target of 4.9%
- Decline in year-on-year inflation to 23.6 percent end December, 2003 after peak of 30 percent in April, 2003
- Depreciation of only 4.7 percent of cedi against the US dollar
- Overall Budget deficit of 3.4 percent of GDP marginally above the budget target of 3.3 percent of GDP
- Net Domestic financing registered a repayment of 0.4 percent of GDP against target of zero
- Healthy levels of foreign exchange reserves – covers 3.9 months of imports
- Robust and sustained tax revenue growth:
- ?4.4 trillion in 2000 (16.3% of GDP)
- ?6.6 trillion in 2001 (17.2% of GDP)
- ?8.5 trillion in 2002 (17.5% of GDP)
- ?13.4 trillion in 2003 (20.5% of GDP)
- Ghana Stock Exchange (GSE) All – Share Index appreciated by 154.7% (142.7% in dollar terms) – best ever
- Sharp fall in 91-day Treasury Bill Rate from a peak of 35.3% in June, 2003 to 18.3% end of year
- Growth in Exports:
- US$1,867.1 million in 2001
- US$2,015.2 million in 2002
- US$2,297.2 million in 2003
- District Assemblies Common Fund (DACF) and GETFUND – current on transfers into the DACF & GETFUND
- Ghana’s Sovereign Credit Rating
B+ rating by Standard and Poors
B with a positive outlook rating by Fitch Ratings
SIGNIFICANT DEVELOPMENTAL ACTIVITIES IN 2003
Infrastructure
- Rehabilitation of sections of Accra Kumasi road.
- Commencement of works on Mallam Kasoa and Kasoa-Winneba road sections of Accra – Yamoransa road
- Study progress on Tema-Sogakope section of Accra-Aflao road
- Work on Tettey-Quarshie interchange about 50 percent complete
- Commencement of work on Kwame Nkrumah – Achimota road, Tema Hospital-Ashaiman road including interchange
- Inchaban-Sekondi road
- 1,130 new boreholes fitted with hand pumps completed in the rural areas
Modernized Agriculture
- Ayensu Starch Factory started production in 2003 and exported first consignment of 240 tonnes in September, 2003.
- 30,305 hectares of forest plantation establish in 2003 creating 95,000 jobs.
Cocoa Sector
- Producer Price increased to 9 million at the beginning of 2003/2004 Main Crop Season
- Price almost a 3 fold increase over that paid in the 2000/2001 Main Crop Season
- Bonus payment of ?154.6 billion
- Off-shore loan syndication of US$650 million for cocoa purchases in the 2003/2004 Crop year
- 496,793 metric tones of cocoa produced second highest in the country’s history
- ?253 billion spent on control of capsid and black pod covering an area of 1.6 million hectares
Enhanced Social Services
- 685 3-unit classroom each with toilet facilities, teachers common room, store and library built across the country
- Primary gross enrolment ration improved from 79.5 percent to 81.1 percent
- Funding provided for implementation of 120 District Mutual Health Insurance Scheme in 90 districts
- Implemented a programme for the prevention of mother-to-child transmission of HIV in 19 sites
- Provided Anti-Retro-Viral Therapy to AIDS patents at 4 hospitals.
- Skill training for 10,000 youth
Good Governance
- 1,200 new personnel recruited for Ghana Police Service
Utilisation of HIPC Funds
- Disbursements amounted to ?850.79 billion by the end of the year
Macroeconomic Objectives for 2004
- A real GDP growth of at least 5.2 percent
- Single digit inflation
- Foreign exchange reserves cover of not less than 3 months;
- A domestic primary surplus of 2.3 percent of GDP; and
- A budget deficit of 1.2 percent of GDP
Significant Developmental Activities for 2004
- Start of work on Ofankor-Nsawam and Kumasi-Fumesua sections of Accra-Kumasi Road
- Continuation of work on sections of Accra-Yamoransa road
- Begin work on Sogakope-Akatsi sections of the Accra-Aflao road
- Continuation of Government’s regional road programme
- Upgrading of a number of roads to bituminous surfacing
- Commencement of works on Central Business District roads including reconstruction of the High street in Accra
- Development of Asafo Market interchange in Kumasi
- Continuation of the Tamale arterial roads
- The metro Mass Transit Company will take delivery of 100 DAF/Neoplan buses from Holland
- Construction of 2000 new boreholes fitted with hand pumps
- Completion of Buipe-Bolgatanga petroleum products pipe line projects
- Provision of 20 ground water irrigation equipment
- Completion of 100 factory units under garments and textiles imitative
- Start of work on 25 schools under second phase of Model Senior Secondary Schools Programme.
- Continuation of first phase involving 31 schools
- Distribution of 365 saloon cars, 500 motor cycles and 1000 bicycles for health professionals under hire purchase scheme
- Completion of 15 health centres and rehabilitation of 7 health facilities.
- Rehabilitation of Maternity and medical blocks at the Korle-Bu Teaching Hospital
- Construction of 5 blocks of flats and 12 block of flats for Doctors at Komfo Anokye and Korle-Bu respectively.
- Expansion of 11 nursing training schools
POLICY INITATIVES FOR 2004
Tax Relief Measures
- Increase in the minimum tax free threshold from ?1.2 million to ?1.5 million
- Widening of the income tax bands
- Reduction in corporate income tax rate from 32.5 percent to 30 percent effective next financial year.
- Special tax rate of 25 percent for companies listing on Stock Exchange for the first time
- 5-year tax holiday for new agro-processing firms
- Revised taxes for agro-processing as follows:
:::Accra and Tema - 20 percent
:::Other Regional Capitals - 10 percent
:::Outside Regional Capitals - zero
- For 3 Northern Regions zero tax rates for
Agro-processing firms irrespective of location
- 7-year tax holiday for waste processing enterprises
- reduction in vehicle income tax for articulated trucks from ?1.2 million to ? 900,000
Reduction of Import Duties and Removal of VAT on Selected Imported Imputs
- reduction in import duty on aluminium ingots from 10 percent to 5 percent
- Zero rating of imported industrial raw materials
- Removal of duties on imported lumber
- Removal of VAT on irrigation pumps
- Removal of duty and VAT on imported inputs for fishing nets and fishing ropes
- Removal of taxes on musical instruments
- Removal of GCNet processing fees on currency importation
Other Measures
- DVLA to be connected to GCNet system to facilitate registration of imported vehicles
- Government to derive appropriate returns on investments in commercially oriented public institutions
- Rationalization of interest payments in Government contracts
- Sale of low cost houses to occupiers
- Floatation of new shares on Ghana Stock Exchange
- Tender for new management contract for the bank
- Floatation of new shares in GCB on the Ghana Stock Exchange and encourage Ghanaians to acquire shares.
- Consumer protection through enforcement of health and safety standards
Value Addition to Cocoa Industry
- Government to support commercial production of cocoa industrial by-products developed by Crop Research Institute of Ghana – animal feed, fertilizer, soap, pomade and alcoholic beverages
- 5-year tax holiday for companies investing in production of cocoa industrial by-products
- allocation of ?25 billion to support the establishment of such industries
Other Support Measures
- Government has voted an amount of ?18 billion for the purchase of new varieties of pineapple suckers.
- Government to support the development of a regulated warehouse receipt system
Financial Sector Reforms
- Establishment of Long-term Savings Plan
- Introduction of other financial bills to accelerate the process of financial deepening – the Foreign Exchange Bill, Credit Union Bill, Insurance Bills and Cheques Bill
- Government to recapitalise Exim-Guaranty Company Limited
- Establishment of National Micro Finance Administration to coordinate and administer micro finance programmes
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