Osafo-Maafo says cedi is anchored and stabilised
West African Common currency faces blur future
Accra (Greater Accra) 16 August 2001
"The stabilisation of the cedi is not due to any magic wand, but realistic, prudent and actual management of the economy", Yaw Osafo-Maafo, Minister of Finance said on Wednesday.
"The cedi's stability is real and not a fluke as is being speculated. It is not by the work of a magic wand but because of real and prudent measures of the government", Osafo-Maafo told journalists in Accra on Wednesday on the state of the economy and how some vital economic indicators have performed over the past seven months.
He said the government was taking very bold steps to ensure that demand for foreign currency was held in check while making the cedi evenly available.
"The whole thing is based on a demand and supply mechanism and we have over the period managed to halt the huge rush for the dollar and pound sterling, thus reducing pressure on the local currency."
He said, "if the cedi could stabilise in the lean season, before we enter the cocoa harvesting and general harvest season, then there is no need to worry at all. We are on track and doing well.
"The cedi is anchored and stabilised," Osafo-Maafo said.
A mid-year review of the 2001 Budget would be done at the end of August, according to the Minister. ''The budget is on schedule with the final budget coming up when Parliament resumes."
Inflation had dropped to 34.6 at the end of July compared to the 40.6 per cent registered at December 31, 2000. It was expected to hit 25 per cent by the end of the year.
The Finance Minister said exchange rates have also improved moderately from 7,490 cedis to the dollar last December, to 7,168 cedis at the end of July, with a depreciation rate of 1.7 per cent.
Osafo-Maafo said his short-term objective was to stabilise the economy and ensure that everything promised in the budget was on course.
Macroeconomic stability, while necessary and important, was not enough to bring inflation and interest rates down by themselves, he stated.
"The private sector needs to expand growth and there should be good governance and adequate job creation because we want to diversify the economy, which has depended too much on primary products”.
Cocoa processing is expected to rise from 18 per cent to 40 per cent in the next six years.
The Minister said external debt, which stood at 6 billion cedis at the end of last year, was in present value terms 558 per cent of the government’s revenue, 152 per cent of total expenditure and 77 per cent of GDP.
"Fifty-two per cent is owed to multinationals, 48 per cent to bilateral of which Japan is owed 60 per cent."
Osafo-Maafo said the Value Added Tax (VAT) and Customs, Excise and Preventive Service (CEPS) were up by seven and nine per cent, respectively, of their target while the Internal Revenue Service (IRS) was down by 15 per cent of the required target.
The government hopes to raise 50 million dollars from divestiture between now and December 31. This would be from the sale of the government’s shares in Coca Cola and other joint venture companies.
"Some of them will be put out through the Ghana Stock Exchange while those in joint venture-ship will follow the procedures outlined in the law."
Osafo-Maafo said the government had paid 70 billion out of the 334 billion-cedi debt inherited from road arrears, adding that the remainder would be cleared by the end of December.
The government has also paid 105 billion cedis out of the 500 billion cedis debt of non-road arrears comprising procurement of equipment and other logistics.
Payment, in certain instances, has delayed because of an on going auditing of some government expenditures.
Cabinet, he said, was meeting the Central Bank to find out means of reducing interest rates to correspond with other falling economic indicators such as inflation.
The Minister said expenditure ceilings different from what was in the budget have been prepared for all ministries, departments and agencies.
"This is to ensure that government expenditure was controlled.
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Accra (Greater Accra) 15 August 2001
The government is in the process of appointing a new Governor of Bank of Ghana because Dr Kwabena Duffour, the current governor, had decided to quit.
Dr Duffour, whose four-year term expired on July 16, informed President John Agyekum Kufuor of his decision in a letter last month.
Yaw Osafo-Maafo, Minister of Finance, made this known on Wednesday when he spoke to journalists on the state of the economy over the past seven months.
President Kufuor has already made some nominations for approval by the Council of State, he disclosed and expressed the hope that a new Central Bank Chief would be appointed soon.
"The two deputies are very capable and are holding the fort very competently," Mr Osafo-Maafo said.
GRi../
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Accra (Greater Accra) 16 August 2001
Minister of Finance Yaw Osafo-Maafo on Wednesday said none of the countries forming the West African Monetary Zone was capable of meeting the convergence criteria set out by the West African Monetary Institute (WAMI).
Even though the five member countries - Ghana, Nigeria, Liberia, Sierra Leone and The Gambia - were working to meet the set targets within the timeframe, "they cannot meet them fully despite the fact that they will make some inroads", Osafo-Maafo told journalist in Accra.
The criteria stipulate that member countries must maintain price stability by reducing inflation to a single digit by 2003, reduce budget deficit to a ratio of five per cent by 2000 and four per cent by 2002.
Budgetary financing by the central bank of member countries should not exceed 10 per cent of the previous year's fiscal receipts and maintain foreign exchange reserves that will support import cover for three months by the end of 2000 and six months by 2003.
The Finance Minister said meeting the target was paramount to the government's objectives, adding that the position of the two Bretton Woods institutions (IMF & World Bank) was just to support the government to achieve some of the targets even though within a different setting.
The Bank had not in any circumstance asked Ghana to back out of the zone, he stated. "We see the need to stick to the zone and no one can change our mind about it."
A number of government officials and some independent bodies have recently questioned the possibility of meeting the WAMI criteria within the time set by the Institute.
But WAMI officials claimed it would be possible if the countries adopted stringent fiscal and monetary policies.
GRi../
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Accra (Greater Accra) 16 August 2001
President John Agyekum Kufuor on Wednesday said divesting State Enterprises should create the catalyst necessary to engender the private sector to spearhead the growth of the economy.
He urged the Divestiture Implementation Committee (DIC) to involve the Ghana Stock Exchange (GSE) and joint ventures in the process to enlarge public shareholding in the companies to make them operate efficiently.
President Kufuor made the call when he swore into office nine out of the 10 members of the Board of Directors of the DIC at the State House in Accra.
He said Ghanaians have not been impressed about the process of divestiture because it had not been transparent.
Beneficiaries could also not put such companies on sound keel and tried to lay off employees, he said, adding "no efficient use were made of the many companies divested for the benefit of the people."
President Kufuor said despite these shortcomings, the people have not given up the hope in divestiture, adding that they were appointed because the government trusts their integrity and competence in their various fields to take the right decisions.
He expressed the hope that, henceforth, any divestiture that would be made would be to competent people who would keep to their word to resuscitate the companies and run them efficiently to make profits for the people and employees.
President Kufuor said it was necessary for the Committee to accept to consider issues that confront them with a sense of balance, having in mind the economy and society, especially with regard to public utilities like water and electricity.
"You should not shirk your responsibilities because they are basic amenities which people are entitled to, therefore, keep your eyes on affordability in the rural areas."
He said people should be entitled to potable water supply and good electricity without overburdening the rural dwellers.
President Kufuor said the government would assist them to perform creditably but warned that it would rebuke them for any shortcomings.
Yaw Osafo-Maafo, Minister of Finance is the Chairman of the Board.
The other members of the Board are, B. Poku-Adjei, the Executive Secretary, Dr Kofi Konadu Apraku, Minister of Trade and Industry, Mrs Cecilia Bannerman, Minister of Manpower Development and Employment, Mr Kwasi Adu Amankwaa, Secretary-General of the Trades Union Congress (TUC).
The rest are Dr W. Odame Larbi, Executive Secretary of the Lands Commission, Dr George Manu, Chief Executive Officer of EMPRETEC, Ghana Foundation, Frank Ocran, J. K. A. Wiredu, a Management Consultant and Ms Gloria Akuffo, Deputy Attorney General, who was not present at the function.
GRi../
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