Business confidence in the national economy increased during the first quarter of the year, Dr Paul Acquah, the Governor of the Bank of Ghana, has stated.He said nearly 80 per cent of the credit went to the private sector, with the major recipient being the manufacturing sector.

Dr Acquah, briefing the media after the two-day meeting of the Monetary Policy Committee (MPC) in Accra yesterday, stated that in view of the stable macro-economic indicators the economy had enjoyed over the past four months, the MPC had decided to reduce the Bank of Ghana Prime Rate from 20 per cent to 18.5 per cent.

He said the immediate task of the government for the ensuing months was to continue with its fiscal and monetary policies towards a low and stable inflation and increased growth.Reviewing the various benchmarks for the first quarter, Dr Acquah said the 91-day Treasury bill rate increased marginally from 17.6 per cent in February, 2004, to 18 per cent in April.

Additionally, he said inter-bank market rates moved slightly downwards from 15.8 per cent in February, 2004, to 15.3 per cent at the end of April. He noted that commercial banks? base rates were kept between 25.5 per cent and 27 per cent, significantly above money market rates.

The governor, who is also the chairman of the MPC, noted that cocoa earnings for the first quarter of this year amounted to $218 million, a marginal increase over the same period last year.Gold earnings for the same period was 56 per cent up from last year?s figure to reach $295 million.

Dr Acquah said private inward remittances, transfers from non-governmental organisations, religious groups, individuals, among others, which were channelled though the banks and the finance companies, amounted to $611.5 million for the first quarter of the year, representing a 15 per cent increase over the same period last year.

Total government receipts for the first quarter amounted to about ?4 ,026 billion, an increase of 17 per cent above total receipts for the same period last year. Government expenditure for the first quarter, however, exceeded its target, amounting to ?4,769 billion, compared to a budgeted estimate of ?4,136 billion, Dr Acquah noted.

On inflation, Dr Acquah said developments in the consumer price index since early this year, indicated that inflation had continued to fall steadily, although it picked up to 11.2 per cent at the end of April from 10.5 per cent in March.

On the continued increases in crude oil prices on the world market, which is currently above $40 per barrel, the governor said it was a source of concern to the economy.Additionally, he indicated that the prices of cocoa and gold, the major export earning commodities of the country, had also softened relatively, as compared to last year.

Dr Acquah, however, said that exports were projected to grow by five per cent this year, owing to increases in the output of cocoa, coupled with increases in gold and non-traditional exports.?This should underpin the improving domestic economy and balance of payment position,? he said.

He indicated that the country also was expected to benefit from the prospective donor financing disbursement under the Multi- Donor Budget Support Mechanism.He noted that the country was scheduled to reach the HIPC completion point this year and stressed that ? this will result in a significant reduction in the external debt and the uncertainties regarding the country?s debt service obligations?.