BUDGET: Economy continues to expand

Accra, July 13, GNA - Selected indicators point to a continued expansion in the economy, notwithstanding the downside risk emerging from the high and volatile international crude oil prices, the Minister of Finance and Economic Planning said on Thursday. He said income and corporate tax collections by the Internal Revenue Service (IRS) for the first four months of 2006 amounted to A21,843.19 billion, 6.2 per cent higher than that collected during the same period in 2005.

Presenting a Supplementary Budget for 2006 to Parliament, he said workers' contributions to Social Security and National Insurance Trust (SSNIT) from January to April 2006 totalled A2990.7 billion as against =A2594.3 billion collected in the corresponding period of 2005 an improvement of 66.7 per cent.

The Minister said data available from Driver and Vehicle Licensing Authority (DVLA) indicated that new vehicle registration from January 2006 to April 2006 indicated a positive growth of 16.0 per cent to 25,413 compared to the same period in 2005.

From the beginning of the year to April a total of 133,425 international tourists visited the country averaging around 33,356 per month.

On the employment side, the Mr Baah-Wiredu said the growth in job vacancies announcement provides further evidence of a strong economy with job vacancies increasing by 30.2 per cent from 2,042 during the last quarter of 2005 to 2,658 in the first quarter of 2006. Cumulatively from January 2006 to April 2006, a total of 3,249 job openings have been announced through the Daily Graphic alone. "Were this trend to continue, the number of job openings from this source will amount to about 9,746 in 2006 as compared to 8,067 in 2005, an increase of about 20.8 per cent."

Mr Baah-Wiredu said the Bank of Ghana's Composite Index of Economic Activity confirmed the upward trends in the economy. The Index rose by 4.6 per cent in real terms between January and April 2006. He noted that inflationary pressures continued to fall during the first four months of the year. Headline inflation declined from 14.9 per cent at the end of 2005 to 14.6 per cent and 12.1 per cent in January and February, respectively. This declined further to 9.9 per cent at the end of the first quarter in 2006.

"The disinflation process continued to April with average prices increasing by 9.5 per cent making it the lowest ever recorded since May 1999. The inflation rate inched up marginally in May 2006 to 10.2 per cent as a result of the pass-through effect of the April fuel price adjustment of 10 per cent."

The Prime rate was reduced at its first meeting in January 2006 from 15.5 per cent to 14.5 per cent in line with the balance of risks in the outlook for price stability. However, at its second meeting in March 2006, the Prime rate was kept unchanged at 14.5 per cent.

The Minister said the downward trend of the prime rate at 14.5 per cent continued to impact on interest rates in the economy. In the Government securities market, the average interest rate on the 91-day Treasury Bill Instrument declined further to 9.8 per cent as at the end of March 2006, while the inter-bank weighted average rate recorded 8.3 per cent.

Mr Baah-Wiredu said the domestic foreign exchange market continued to be relatively stable during the first quarter of 2006 thanks to the sustained macroeconomic stability, the relatively healthy international reserves position and growing confidence in the economy. "The weakening of the dollar on the international market also impacted on the relative strength of the Cedi against major foreign currencies.

"The numbers showed that from January to May, the cedi depreciated against the dollar by 0.2 per cent in the inter-bank market, same as in the corresponding period of last year.

The cedi was weaker against the Pound Sterling and the Euro in the inter-bank as it depreciated by 8.6 per cent and 7.9 per cent, respectively, during the first five months of the year. In the forex bureau market the cedi posted stronger performance during the quarter as it recorded 0.3 per cent appreciation against the dollar but depreciated by 5.3 per cent and 5.5 per cent against the Pound and the Euro, respectively.

The volume of transactions by forex bureaux amounted to 1,728.1 million dollars, which was 5.5 per cent higher than the volume recorded during the previous quarter and 16.9 per cent higher than the recorded volume of transaction during the same quarter a year ago.