Business News of Thursday, 7 February 2013

Source: Economy Times

Agric, growth & job creation lead 2013 budget

By next month, the Minister for Finance and Economic Planning, Hon Seth Terkper will deliver his first budget statement to parliament for consideration and approval.

Economy Times has learnt that the 2013 budget will focus on three key areas which are agriculture, growth and job creation, as policies are currently developed to drive this agenda.

The policy directions will be on the service sector, manufacturing and the industry sector to propel growth and job creation for 2013.

As usual, the private sector concern is the high cost of credit For the 2012 budget the overall economy was projected to grow by more than 8 per cent, with the inflation rate remaining broadly stable at the upper single digit range; however provisional figures from the Ghana Statistical Service for 2012 showed a growth of 7.1 percent over the 2011 revised estimates. The Services sector, which is also the largest sector, recorded the highest growth of 8.8 percent, followed by Industry (7.0%), with Agriculture recording the lowest growth of 2.6 percent. Though the estimates show an improvement in the growth of the Agriculture sector compared to 2011 (0.8%), its contribution to the economy continues to decline, with its share reducing from 25.6 percent of GDP to 23.1 percent. Crops, however, remains the largest activity in the economy with a share of 19.3 percent of GDP.

Industry, the second largest sector with a share of 27.6 percent, declined in growth from a record high of 41.1 percent in 2011 to 7.0 percent in 2012. Decline in crude oil production, coupled with slow growth in manufacturing and production and distribution of water, contributed to the drastic reduction in the growth of the sector.

The Services sector remains the largest, contributing about half (49.3%) to GDP. Five of the activities in this sector recorded growth rates above 10 percent. These sectors are: Hotels and Restaurants; Transport and Storage; Financial Intermediation; Information and Communication; and Business Services. With gas infrastructure in place and increased activity in cocoa and gold, revenues is expected to remain fairly strong, although more will need to be done to help ensure the sustainability of Ghana’s development and improve job creation

Exports grew over the course of 2012, dominated by the traditional commodities of gold and cocoa, which together make up almost two-thirds of total revenues. With the oil industry’s contribution now added in, roughly 80% of Ghana’s exports come from raw commodities. Rising imports, buoyed in part by growing domestic consumption, have helped widen the current account deficit. Parliament last year approved a little over GHC6 billion cedi to take care of government's expenditure in the first quarter of next year.

This covered interest payments, compensation of employees, statutory payments and subsidies.

The 2013 budget estimates also revealed that the country will be able to mobilize 4.3 billion cedis in revenue for the first quarter of this year.