Ghana's economy given clean bill of health

...Despite Global Turmoil
Managers of Ghana's economy on Tuesday gave it another clean bill of health despite the turmoil in the world economy triggered by escalating oil and food prices.

Dr. Anthony Akoto Osei, Minister of State at the Finance Ministry, on Tuesday gave a positive assessment of the economy, saying the second half of the year held much prospect for the country.

Speaking at a press conference on the state of the economy after the announcement of government's mitigation measures, Dr Osei said although inflation would continue to be a damper, the country's fiscal and current accounts position would show much improvement in the second half of the year.

"We are keeping tight to our growth targets. It may even end up

much higher than forecast," he said. The President John Agyekum Kufuor on May 22 announced

measures to enable Ghanaians cope with the rising cost of living as a

result of increasing oil and food prices. Among the measures are the removal of import duties on rice,

wheat, yellow corn and vegetable oil, the removal of excise duty and

debt recovery levy on premix oil and subsidization of the cost of

fertilizer. The mitigation measures are to cost government GH¢ 97.2 million

in revenue loss. Dr. Osei said he was confident that the various measures being

undertaken by government would lessen the impact of the current

economic hardships on the budget.

For example, the Volta River Authority is revising its generation mix, to use 65 per cent hydro and 35 per cent thermal, there are also new tariff levels that will come into effect for high voltage customers, such as the mining companies and steel mills and the shut down of the emergency power plants.

From July 1, the high voltage consumers will pay an end user

tariff of 22.31 Ghana Pesewas per kWh. Besides, government is also expecting enhanced divestiture

receipts, especially from the sale of Ghana Telecom. Dr Osei said these measures would cut down significantly on

crude oil imports and lead to enough savings to help the fiscal

position and conserve foreign exchange and reduce the pressure on

the Ghana Cedi.

Crude oil import bill has risen from 500 million dollars in 2005 to 2.1 billion as at the end of 2007 and is expected to reach 2.5 billion this year.

There are also administrative measures for revenue mobilization being undertaken to ensure that the revenue agencies collect as much revenue as possible while expenditure of the Ministries, Departments and Agencies was being rationalized to ensure that non-developmental capital expenditure is reduced as much as possible.