Dr Kwabena Duffuor, Finance and Economic Planning Minister, on Thursday presented the Budget Statement and Economic Policy for the Fiscal Year 2011, the second budget statement of the government under the "Better Ghana", vision to improve standard of living for all Ghanaians.
It was under the theme: "Stimulating Growth for Development and Job Creation."
The theme was chosen to focus attention on the need for government to propel the economy onto a higher growth and development trajectory.
Dr Duffuor said government would achieve its "Better Ghana" agenda through the implementation of sound and prudent economic policies intended to ensure continuous stability and to stimulate growth within an environment
of good governance.
He noted that despite the challenges, government had made significant progress adding the economy had shown strong resilience and
stability as indicated by key macroeconomic indicators.
Dr Duffuor said the fiscal deficit reduced significantly from 14.5 per cent of gross domestic product (GDP) on cash basis at the end of 2008 to 9.7 per cent of GDP in 2009.
Speaking on inflation, he said price increases had trended downwards in 16 consecutive months from 20.74 per cent at the end June 2009 to reach 9.38 per cent in October 2010 describing the trend as the lowest recorded
in the last two decades.
Dr Duffuor said gross international reserves of 3,973.0 million dollars at the end of October 2010 had exceeded three months of import cover compared with reserves of 2,036.2 million dollars at the end of December 2008.
"The cedi has strengthened and appreciated by 0.1 per cent, 2.2 per
cent and 5.4 per cent against the dollar, the pound sterling and the euro respectively," he said, adding that the oil and gas production would further consolidate the effort and ensure accelerated growth.
"With the progress made so far, I can confidently state that we are ready to make the transition from stability to accelerated growth."
Dr Duffuor said that as a result of collective effort towards good governance the country had joined the league of middle income countries adding, "with their support and more importantly through our own efforts, we will forge ahead with the challenge to ensure an accelerated growth and development as well as fair and equitable income distribution."
He announced that the medium-term development framework known asthe "Ghana Shared Growth Development Agenda" (GSGDA) 2010-2013), had been completed and it was expected to be presented before parliament.
Dr Duffuor said government was committed towards meeting fully the challenges posed by a comprehensive administration of the Single Spine Salary Structure adding government would focus on improved efficiency in revenue management.
He said 2011 would pose a challenge to test how the oil revenues would be used to transform the economy and accelerate growth without sacrificing macro-economic stability and accentuating income inequalities.
"Based on experiences from other oil and gas producing countries, government is taking steps to manage the oil and gas revenues in a manner. Our goal is to ensure that the building blocks for accelerated growth and development, namely, social, economic and physical infrastructure are appropriately improved. It is in this context that we recently presented to
Parliament, the Petroleum Revenue Management Bill."
Dr Duffuor said government would invest significantly in energy, road and rail transport to facilitate private sector expansion for
employment generation.
"These growth-driven investments will be complemented by social intervention programmes in line with the core values of the NDC in providing
equality of opportunities and improvements in the social development of our people," he said adding that the rest of the social intervention programmes in the health and education sectors would continue to be funded.
Dr Duffuor said government would harness and effectively use available resources from both domestic and foreign sources to sustain the
macroeconomic stability for improved private sector growth, which would stimulate employment and improve the quality of life for Ghanaians.
On the global economic developments, he said the world economy experienced gradual recovery since the 2007-2008 major recession with
downside risks remaining prominent because most advanced and few emerging countries were faced with major fiscal adjustment problems, sluggish growth and high unemployment rates.
"Many developed countries are still confronted with huge public debt and fragile financial sector which have to be dealt with through monetary and fiscal measures. Some of these measures may, however, lead to further
lowering of global demand and consequently affect the growth rate of global output and worsen the current high unemployment rates globally."
Dr Duffuor expressed optimism that the global developments could have implications on Ghana's economy since reductions of the budgets of the developed countries might results in cuts in external aid to developing countries and lower demand for exports.
He said the International Monetary Fund forecasted the global output to expand by 4.8 percent in 2010 and 4.2 percent in 2011 adding that the growth projections would be led by emerging and developing economies with projected rates of 7.1 percent and 6.4 percent in 2010 and 2011.
"To overcome the potential downside risks, the Fund recommends the need to strengthen private sector demand in advanced economies, continuation of fiscal consolidation, and an increase in net exports in deficit countries."
Dr Duffuor observed that economic recovery had been faster than expected in sub-Saharan Africa with projected growth rate of 4.5 per cent in 2010 and 5.7 percent in 2011 compared with the growth rate of 2.0 percent in
2009.
"The downside risks to this favourable growth outlook are the highly volatile financial sector and the uncertainties in the developed countries which can result in lower demand for raw materials and lead to lowering of commodity prices," he said.
Dr Duffuor said the implementation of the Ecowas Common External Tariff (CET) and Ecowas Community Development Programme (CDP) presented
opportunities and challenges to both the government and the private sector.
He said the CET and CDP had far-reaching implications for government revenue as well as exports of manufactured goods and imports.
Dr Duffuor expressed government's commitment towards supporting domestic manufacturers and exporters to enable them reposition their businesses to take advantage of the opportunities presented by the wider market that the community would create.
He said government sought assistance from the IMF to help stabilize the economy as a result of the severe macroeconomic imbalances that the
political administration inherited from the previous management.
Dr Duffuor said on 15th July 2009, government requested for a three-year programme called the Extended Credit Facility (ECF) in 2009 from the IMF adding that the Executive Board of the international entity approved a loan of 387 million Special Drawing Rights (SDRs) equivalent to 602 million dollars as balance of payments support to Ghana.
"This amount is expected to be disbursed in seven tranches over a three-year period (ending in June 2012), after each semi-annual review of the programme," he said.
Dr Duffuor said the first and second reviews of the programme had been successfully completed and a total amount of 218 million dollars had been disbursed to support the country's balance of payments adding that the
third review of the programme was expected to be completed by the end of January, 2011.
"The programme has contributed to the stabilization of the economy as the disbursements have helped to increase the level of Ghana's reserves which in turn has helped stabilize the Cedi and boosted confidence in the economy."