High oil bill, fall in gold and cocoa prices
causing of currency slump - Peprah
Government negotiating salary increases -
Peprah
Pursue policies to change structure of
economy - Yamson
Finance Minister outlines measures to fight
economic decline
AGC makes it in 1999 despite setbacks -
Keatley
CEPS to assume
export oriented outlook
High oil bill, fall in gold and cocoa
prices causing of currency slump - Peprah
Accra (Greater Accra) 27 April 2000
Mr. Kwame Peprah, Minister of Finance, on Wednesday maintained that the steep decline in the world market price of cocoa, confusion on the gold market and the astronomical rise in the price of crude oil are at the heart of the falling value of the cedi.
"It is a fact that cannot be wished away and that bears repeating," he told a press conference in Accra at which he announced measures to deal with the declining economy.
The minister said in 1998 Ghana sold a ton of cocoa for 1,600 dollars and bought crude oil at 11 dollars a barrel.
"Today, we are selling a ton of cocoa at 800 dollars and buying a barrel of crude oil for about 22 dollars", Mr. Peprah said.
He said these difficulties not withstanding, "there is light at the tunnel" as government has initiated moves with its donor partners to fill in the projected gap of 150 million dollars in cash flow. What remains to be done now is to accelerate the redemption of pledges, which would otherwise be due in the second half of the year.
Mr. Peprah said the government has arranged for 200 million dollars of the inflows due in the second half of the year to be advanced to the first half of the year. 50 million dollars out of the amount had already been received and the remaining 150 million dollars was expected shortly.
Mr. Peprah expressed regret that the Ghanaian economy has been and is still too import dependent in spite of efforts made to curb it and said provisional statistics show that, last year, 38 per cent of consumer goods imports were spent on used clothing, frozen fish, wheat and rice, adding that food imports constituted about 30 per cent of consumer goods imports.
Mr. Peprah cautioned that the nation's ability to continue to maintain current import levels depends on its ability not just to export more, but to export things other than cocoa whose prices can better withstand price fluctuations in the world market.
He said in the short term, the country must re-examine her imports with a view to reducing them or substituting them with what can be produced locally.
The Minister said export earnings have steeply declined and as such the country is no longer able to sustain the level and types of imports previously brought into the country. To address this, Ghanaians should change their habits and attitudes.
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Government negotiating salary increases -
Peprah
Accra (Greater Accra) 27 April 2000
Mr Kwame Peprah, Minister of Finance, said on Wednesday that despite the present difficulties facing the economy, the government is negotiating to increase workers' salaries in order to compensate for the erosion of their purchasing power.
He said although government's ability to fund its expenditure suffered as a result of revenue shortfalls, it would continue to fulfil its obligation to workers.
"We do not wish to adopt the practice in other countries where it is salaries which are not paid, not to talk of increases in those salaries," Mr. Peprah said.
He was addressing a press conference to dilate on efforts to arrest the recent imbalance in the economy, especially the rapid depreciation of the cedi.
Mr. Peprah appealed to workers to resist the temptation to "play political football with the economy" as the elections draw near.
"Populist rhetoric, blackmail threats, wildcat strikes all combined to wreak havoc on the progress of our economic forward march" as experienced during the previous elections and must be avoided.
He warned that when the economy goes off course in an election year, it takes years of belt tightening and further harsh fiscal measures to bring it back on course, saying that whatever damage may be done this year will remain a difficult job for the winning party.
Professor Kofi Awoonor, Presidential Aide and a member of the economic management team, admitted that the nation's economy currently has some problems, but cautioned that it should not lead Ghanaians into a state of hysteria.
He also buttressed the need for a reduction in excessive demand by Ghanaians for foreign goods.
Present were Dr. Kwabena Duffuor, Governor of the Bank of Ghana, Mr. John Mahama, Minister of Communications, and Mr Dan Abodakpi, Minister of Trade and Industry.
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Pursue policies to change structure of
economy - Yamson
Accra (Greater Accra) 27 April 2000
Ghana would always experience the volatility that has become an endemic characteristic of the economy if the government and its development partners did not pursue policies that could fundamentally change the structure of the economy, Mr. Ishmael
Yamson, Chairman of Unilever Ghana Limited (UNIL), seaking at the annual general meeting of the company in Accra on Wednesday said, the country's future no longer depended on commodity exports, "not even the growing exports of non-traditional commodities.
"Those belong to the old, 20th century world economy. The 21st century economies can only be built on value-added manufacturing, information technology, information management, services, education, the Internet and tourism, among other things."
He, therefore, asked the government and its development partners, principally the World Bank and the International Monetary Fund (IMF), to come to the realisation that there was the need to pursue policies that could fundamentally change the structure of the economy.
Mr. Yamson said it looks as if all the odds are against Ghana, "but a lot could have been done and can still be done."
"We should take the future of this country firmly in our own hands and change its protracted volatile fortunes. We need to act with an urgency not yet demonstrated", he said.
Mr. Yamson said the government for instance, could cut down on its consumption expenditure to bring the budget under control.
"That way, we can be spared the nightmare of the looming rising inflationary pressures. It is a risk we cannot afford to ignore. We must also be bold to ignore the fallacy of the developed world, World Bank and the IMF, all of which have persuaded developing countries to withdraw support to their farmers while they actively protect their less competitive agricultural sectors.
"That is why today we import a large tonnage of rice, plantains, chicken wings and parts, products that in the 70s we were able to produce in sufficient quantities in Ghana. Something has gone wrong and we must reverse the trend", he said.
Mr. Yamson said the company had great expectations and confidence that the business environment for 1999 was going to stabilise. "However, developments in the fourth quarter destroyed that confidence."
He attributed this to, among other factors, the plummeting of the cedi between October and December from 2,694 cedis to the dollar to 3,559 cedis, showing a depreciation of 32 per cent in just three months.
"If we take it from the beginning of the year, the depreciation was over 50 per cent. This caused totally unexpected large exchange losses to the company and also meant that we had to borrow additional funds to support our business thereby incurring much higher than planned interest charges", Mr. Yamson said.
The Unilever boss said his company however, managed to pay a dividend of 195 cedis compared with the previous year's figure of 173 cedis.
Profit after tax also went up by 13 per cent from 13,091 million cedis to 14,803 million cedis. Earnings per share and shareholders' fund increased by the same percentage.
Mr. Yamson said the volume of growth of the company went up by 18 per cent while turnover of 248,545 million cedis also went up by 11 per cent to 275,551 million cedis.
He described this as a strong performance and said it was achieved through value pricing as a result of competitive costs and deeper market penetration, especially in the rural areas.
On the future outlook, Mr Yamson said: "we are already aware that the year 2000 will be a difficult one. The cedi is now in a free fall and inflationary pressures are building up.
"Costs will consequently rise and disposable income and purchasing power shall steeply decline and for a consumer business such as ours, the challenges can be daunting."
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Accra (Greater Accra) 27 April 2000
The Ghana Stock Exchange (GSE) on Wednesday made a significant gain of 4.16 points in its main market indicator after losing 1.09 points in the first post-Easter trading on Tuesday.
Tuesday's loss was attributed to effects of the slide of the cedi but the index defied all odds to climb from 863.70 points to 867.86 points on the strength of gains by five equities.
There was no price depreciation however, market activities continued to be offer-driven with only 25,500 bids against 2.3 million shares offered. Shares demanded and offered on Tuesday were higher, at 79,900 and 2.7 million.
Total shares traded on Wednesday were a paltry 18,000 compared with 47,200 shares traded at the previous session. Market capitalisation went up from 3,396.12 billion cedis to 3,402.70 billion cedis.
In the broader market, there were five price changes, all gains.
Mobil Oil Ghana Limited (MOGL) gained the highest of 450 cedis to reach 15,300 cedis followed by Aluworks Ghana Limited (ALW) with 100 cedis at 2,500 cedis.
Home Finance Company Limited (HFC) went up by 43 cedis to close trading at 850 cedis while Pioneer Aluminium Factory (PAF) and Ghana Commercial Bank (GCB) made six and five cedis to finish the day at 300 cedis and 980 cedis respectively.
The following are the last prices of listed equities in cedis
ABL 506
AGC 18,600
ALW 2,500 +100
BAT 450
CFAO 38
EIC 1,880
FML 975
GBL 1,450
GCB 980 +5
GGL 976
HFC 850 +43
MGL 200
MLC 150
MOGL 15,300 +450
PAF 300 +6
PZ 800
SCB 28,500
SPPC 150
SSB 1,998
UNIL 1,900
UTC-E 125
CMLT 422
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Finance Minister outlines measures to fight
economic decline
Accra (Greater Accra) 27 April 2000
Finance Minister Kwame Peprah, faced with mounting pressure to arrest the rapid fall of the cedi against the major currencies, on Wednesday outlined short to long-term measures to address the difficulties, which he said, were temporary.
Mr. Peprah told a press conference in Accra that in the short-term, all buyers of foreign exchange would now be required to provide identification.
Besides, no single individual or company will be allowed to purchase more than 2,000 dollars at a forex bureau in a single transaction or on the same day.
He reiterated that it would be an offence for any forex bureau to pay exchange rates different from those advertised on their notice boards.
He said a priority list of users of forex exchange has been drawn up whose needs would be met directly from resources being mobilised by the state.
Mr. Peprah said a special tax on identified non-essential imported items and approved standards for all imported goods are to be vigorously enforced, and "stern measures are to be taken to prohibit unfair practices bordering on dumping by foreign companies."
He said the decision for public institutions to buy Made-in-Ghana products currently restricted to the civil service is to be extended to the entire public sector.
Mr. Peprah said all retained export earnings are to be repatriated into Ghana and kept in Ghanaian registered bank accounts which would now attract interest.
The Minister also called for the settlement of all due outstanding divestiture receipts within one month.
He said the law prohibiting travellers from taking out foreign exchange of more than 3,000 dollars or in excess of the amount declared by them while entering the country, will be enforced. In addition, foreign exchange from rent income is also to be rigidly enforced.
The Minister said the initiatives announced in this year's budget to set up a Parliamentary Oversight Committee on the performance of revenue collecting agencies with special powers to deal with delinquent or corrupt officials, and the establishment of a special task force to plug revenue loopholes, will be immediately implemented.
He charged all revenue collecting agencies to mount "pay your tax" campaigns and asked them to submit proposals for expanding their tax bases within two weeks.
On cutting government expenditure as outlined earlier in the budget, Mr. Peprah said restrictions on the use of mobile phones by public officials, participation in overseas conferences and the proposed 25 per cent cut in fuel allocation to ministers and other government officials, are all to be rigidly enforced.
District Assemblies, he said, are prohibited from awarding contracts beyond the limit of their common fund allocations unless they can show evidence, that such contracts can be financed from their own sources.
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AGC makes it in 1999 despite setbacks -
Keatley
Accra (Greater Accra) 27 April 2000
Despite massive setbacks suffered in the last quarter of 1999, Ashanti Goldfields Company (AGC) says it finished the year stronger than any other year of its operations.
The Company, according to Mr. Mark Keatley, Chief Financial Officer, saw gold production hitting a high of 1.56 million ounces at a reduced operating cost of 205 dollars per ounce.
Turnover for the Group, however, was slightly less at 582.1 million dollars as against the 600.3 million dollars posted in 1998. AGC made a huge loss of 183.9 million dollars last year.
He told a press conference in Accra that earnings before exceptional items were 66.1 million dollars in 1999, down from the 73.9 million dollars registered the previous year.
Four of the six mines - Bibiani and Iduapriem in Ghana, Siguiri in Guinea and Freda-Rebecca in Zimbabwe - operated at record levels last year. The Obuasi mine contributed the highest of 740,000 ounces.
Mr. Keatley attributed the fall in earnings principally to a reduction in realised gold price from 385 dollars per ounce in 1998 to 372 dollars per ounce in 1999.
He mentioned tighter control of operating costs and increased productivity as some of the offsetting effects of the 13-dollar per ounce drop in revenue last year.
Commenting on problems with the hedging programme in the face of falling world prices in the third quarter of 1999, Mr. Keatley said it was a credit crisis and not a cash crisis.
"The whole thing has been misunderstood and it must be clear that the hedging problem did not cause any cash flow problems." He said the Group has decided to revise its hedging policy by undertaking some strategies.
"These include lower limits for protection and commitment contracts, putting lower limits on production as well as have a forward planning programme that covers larger scenarios, beyond what happened in October last year."
He said the depletion of surface reserves warranted the rationalisation of the mine's operations based on a revised life of mine plan to maximise the present net value of the ore reserves and resources. He said this would result in the end of open pit mining at the close of this year.
"Tailings re-treatment will end in 2002, oxide, tailings and Pompora treatment plants will also cease operation in the same year."
Concerning the operations of the Group last year, Mr Trevor Schultz, Chief Operations Officer described the second quarter of 1999 as "miserable" being the time of the strike at the Obuasi mine and low production.
He said the third quarter was not any good, especially with the onset of heavy rains. "But the fourth quarter was refreshing with a boost from the good production results and good world market price. This put the company's operating fortunes at an all-time high."
Mr. Schultz said the group's safety record is one of the best in the world, adding "compared to Australia, Canada and South Africa, Ashanti is doing far better and leads the pack in terms of environmental and safety records."
The Freda-Rebecca mine in Zimbabwe and Bibiani in Ghana attained South Africa's National Occupational Safety Award (NOSA) with four star ratings while Iduapriem was awarded a three-star NOSA award.
Mr. James Anaman, Managing Director for Public Affairs, said the choice of Anglogold as a partner was dictated by the consideration of factors that would enhance the mission of the group as the premier gold mining company in Africa.
Mr. Anaman said recent events at Bibiani are "regrettable" but expressed relief that no AGC employee was injured or critical installation damaged. "We only had damage to equipment, housing and property."
He said the operations of the illegal miners pose a great problem, adding that without support from central government it could not be solved.
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CEPS to assume
export oriented outlook
Honuta (Volta Region) 27 April
2000
The government's ability to meet
workers wage bills, maintain stability in fuel supply and keep the economy
moving in spite of crude oil price hikes and shortfalls in foreign earnings,
attest to its prudent economic management, Mr. Dan Abodakpi, Minister of Trade
and Industry said on Tuesday.
Addressing staff of the Customs
Excise and Preventive Service (CEPS), Immigration and Trade at Honuta, Shai and
Nyive during his one week tour of institutions under the ministry in the Volta
region, he said these constraints have made the government to step up the volume
of the country's export trade.
It is in this vein that CEPS is
undergoing a new orientation in which it would become a major facilitator of
the export sector of the economy.
He said CEPS can no longer keep to
its traditional role of revenue collection from imports otherwise the country
would become a consumer market servicing the economies of countries in the
sub-region especially in this era of new trade relations and liberalised market
regimes.
The minister therefore charged CEPS
officials at the borders to facilitate the initiative of local people selling
whatever goods they have to neighbouring countries and educate them to receive
foreign cash for such goods.
Mr. Abodakpi said instructions
would be issued soon with regards to the present practice in which only
specific border points are designated to handle certain export transactions.
He said there are several leakages
in the export sector especially at the borders and these have created the
situation in which the country has not benefited much from small export
transactions between Ghanaians in the border communities and their foreign
neighbours.
Mr. Abodakpi said this situation
is a great loss to the economy as it tends to adversely affect the country's
balance of trade and payments because neighbouring economies are serviced by
Ghanaians who shuttle across the borders daily to engage in seemingly small but
lucrative business activities.
He announced that by September
this year all CEPS check points on major routes will be dismantled by which
time vehicles, motor cycles and other logistics would be provided for the
service to carry out "snap" checks along routes where necessary.
Mr. Prince Ashiagbor, Senior
Collector of CEPS in charge of Honuta border said business across the border
has slackened.
In the first week of April, 1.7
million cedis was collected as revenue from imports, while 2.98 million cedis
and 3.44 million cedis were collected in the second and third weeks
respectively. He explained that importers cited the foreign exchange rate as
the cause of low business.
The situation at the Nyive border
is the same, he said and explained that goods from Nigeria, which normally
passed through the border, now pass through the Tema Harbour.
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