GRi Business & Finance 21 - 02 - 2002
Fiscal balance shows better performance of
economy – Minister
Accra (Greater Accra) 21 February 2002 - Finance Minister Yaw Osafo-Maafo on
Thursday announced that tax revenues in 2001 exceeded the budget projections of ¢6,255.2 billion by ¢301.7 billion, because of yield from value added taxes and import duties.
Direct tax collections by the IRS recorded ¢2,123.7 billion, compared to the budget projection of ¢2,246.2 billion Mr Osafo-Maafo said in a budget statement he presented to Parliament on Thursday.
He said Value Added Tax yielded ¢1,964.1 billion against a target of ¢1,744.7 billion, showing a higher performance of 12.6 per cent. Petroleum taxes were ¢646.6 billion, showing a shortfall of ¢29.7 billion while import duties yielded ¢1,268.5 billion exceeding the budget projection of ¢1,086.2 billion by 16.8 per cent.
The Finance Minister said receipts from cocoa export duty amounted to ¢300.0 billion, against the projection of ¢255.1 billion, while the non-tax-revenue of ¢347.7 billion was marginally below the budget target of ¢350.0 billion.
Project grant and loans fell short of expectations. The inflows for loans and grants were ¢1,113.8 billion and ¢511.0 billion, against the targets of ¢2,247.0 billion and ¢707.3 billion respectively.
Programme loans and grant inflows also recorded ¢1,055.6 billion and ¢1,059.0 billion, respectively. These compare with the respective targets of ¢1,224.9 billion and ¢707.3 billion.
Mr Osafo-Maafo said the increase in programme grants reflects an increased confidence by our development partners in our economic and financial policies.
Divestiture receipts were ¢154.4 billion, against a target of ¢391.2 billion. The divestiture programme was stalled to allow for stock taking and auditing of the activities of the Divestiture Implementation Committee. This explains the less-than-projected divestiture proceeds.
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Accra (Greater Accra) 21 February 2002 - Provisional outturn for 2001 indicates that overall fiscal balance was a deficit of 4.4 per cent of GDP.
This shows a better performance than the target deficit of 9.0 per cent of GDP and a deficit of 8.5 per cent in 2000, the Minister of Finance, Mr Yaw Osafo-Maafo, said on Thursday.
Presenting the budget for 2002 to Parliament he said the fiscal balance reflected total revenue and grants of ¢8,476.8 billion and total expenditure of ¢9,697.5 billion.
Domestic primary balance showed a surplus of ¢1,639.0 billion, equivalent to 4.7 per cent of GDP. This also showed a better performance than the programmed balance of ¢1,368.3 billion, equivalent to 3.6 per cent of GDP, and the 2000 outturn of 2.4 per cent of GDP.
Mr Osafo-Maafo said the high primary balance of 4.7 per cent of GDP was on account of estimated items in transit totalling ¢243.8 billion, equivalent to 0.6 per cent of GDP.
"This float emanated from releases that were effected in December 2001, but which had not been debited to government account as at the time of reporting.
"For the sake of transparency, we have decided to include them in our expenditure report, since the funds have already been committed for those expenditure items.
"In effect, if the items in transit are taken into account, the domestic primary balance was 4.1 per cent of GDP."
Mr Osafo-Maafo said the exchange rate of the cedi was stable in both nominal and real terms against almost all the major currencies in the inter-bank and the forex bureaux markets.
"This was in contrast with the developments in 2000 when the cedi depreciated sharply and continuously against the major currencies," he said.
He said on the inter-bank market, the cedi to the US dollar exchange rate increased from ¢7,049.73 at the end of December 2000 to ¢7,312.24 at the end of December 2001, indicating a depreciation of only 3.7 per cent for the year. This was far lower than the depreciation of 49.5 per cent recorded for the corresponding period of 2000.
On the forex bureaux market, the cedi to the US dollar rate increased from ¢6,800.00 at the end of December 2000 to ¢7,322.73 at the end of December 2001, indicating a depreciation of 7.7 per cent. He said this was much lower than the 49.8 per cent recorded for the corresponding period of 2000.
Mr Osafo-Maafo said the reasons for the stability of the cedi exchange rate included the increased confidence of Ghanaians in the prudent financial policies of the government.
"Indeed the stabilisation has been achieved on the fiscal side by strictly limiting the government's borrowing requirements and on the monetary side by shifting its financing from bank to non-bank sources through co-ordinated open market operations."
The Minister said non-bank holdings of the government Treasury Bills increased from 37.4 per cent of total holdings at the end of December 2000 to 47.5 per cent by the end of December 2001.
In addition, the reduced demand for foreign exchange to service debts as a result of Ghana's HIPC declaration, as well as lower the government spending and money supply growth were contributory factors to the observed stability of the cedi exchange rate.
Mr Osafo-Maafo said the functioning of the foreign exchange market had improved markedly as monetary discipline had been restored and macroeconomic performance strengthened.
"The Bank of Ghana has maintained a policy of non-intervention in the exchange market and has made no foreign exchange sales to the market other than those for oil imports, allowing the exchange rate to be determined by market forces.
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VALCO vrs government
Accra (Greater Accra) 21 February 2002 - The Volta Aluminium
Company (VALCO) says government’s directive to cut back power will necessitate
the laying off of its staff. This is because the closure of the company’s two
potlines will reduce its production capacity by half. Resident Director, Dr
Charles Mensa who described the directive as improper says government should
have given the company ample notice before announcing its decision.
VALCO
says its potlines require about 30 days to shut down, or it risks a
solidification of molten aluminium in the pot lines.
The
local branch of Industrial and Commercial Workers Union, dreading the lay off
of some workers have petitioned Parliament to intervene. A petition signed by
Local Chairman, Nana Kwasi Nyante asked the House to ensure that the necessary
processes were followed in handling the issue in order to encourage foreign
direct investment.
Meanwhile,
an Accra High Court, on Wednesday did not grant an ex parte application brought
before it by VALCO for an interim order to restrain government from curtailing
power to the company pending arbitration over the matter.
Government
on Monday directed VALCO to shut down two of its four production units to
create a reserve margin to meet any emergency energy problems that could result
from a break down in any of Volta River Authority’s (VRA) power generating
units. This became necessary because the current power supply equalled
consumption and any shortfall could adversely affect the energy supply
situation in the country.
The
court ruled only on the service of notice to the defendants and directed VALCO
to serve notice with supporting affidavit to the Attorney General’s office, the
VRA and all other interested parties as soon as practicable, for them to
prepare adequately to react to the application.
VALCO’s
counsel, K. Bentsi Enchill argued that the company’s potline requires 30 days
to shut down and that the 48 hour ultimatum given by government is improper.
They also referred to the management contract between government and the
company, which provides that ample notice be given to VALCO prior to a shut
down. VALCO also argued that about 1,250 workers of the company are likely to
be laid off if the government’s order is complied with.
Objecting
to the applicant’s submissions, Attorney General, Nana Akuffo Addo and Kathleen
Quartey Ayensu, Chief State Attorney argued that the matter has serious
national repercussions and can therefore not be heard ex parte.
They
contended that the damages that may be caused to VALCO as a result of the shut
down of the potline could be assessed and compensation duly paid. However,
should the whole nation experience power outages, compensations cannot be paid
for the social and political upheavals as well as riots that are likely to
occur.
“Let us
not subject the interest of the public to the dictates of personal profits,”
the defendants argued. The decision is a big blow to the company, coming after
its parent company, Kaiser Aluminium filed for bankruptcy recently. - Joyonline
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Accra (Greater Accra) 21 February 2002 - The Government has declined to renew the technical and consultancy services agreement with Telekom Malaysia (TM) following the expiration of a contract between the two parties on Tuesday, February 19, 2002.
The government has also ended the exclusive rights of TM in telephony in Ghana as a means of encouraging fair competition in the telecom sector, Felix Owusu-Adjapong, Minister of Communications and Technology, said at a press conference in Accra on Wednesday.
He said the Government was, however, granting a three-month stay to TM to ensure a smooth transition to whatever body or investor that would emerge to provide technical and consultancy services to Ghana Telecom (GT).
Mr Owusu-Adjapong explained that the three-month stay was granted to ensure that things were done in a rational manner where all stakeholders were satisfied and comfortable. "After all, we are not enemies and besides, Telekom Malaysia are not just ordinary people but minority shareholders with 30 per cent in GT."
He said any future management contract would be governed by terms and conditions that would enhance accountability and performance. The Minister said for all management positions, the professional qualifications and technical expertise of personnel concerned shall also be enshrined in the management contract.
Mr Owusu-Adjapong noted that all these decisions were taken after several consultations with the management of TM. He said time was not on the government's side, adding that the Ministry would do all that was reasonable to achieve the best condition for the country.
He said while extending telephone service to the length and breadth of the country remains the biggest objective, "we will equally insist on quality service". The Minister said the National Communications Authority was, therefore, being strengthened to perform its role as the sector regulator.
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Accra (Greater Accra) 21 February 2002- Would-be investors in Ghana's telecommunications sector should be able to raise resources sufficient to develop a minimum of 400,000 fixed lines.
Briefing Journalists in Accra on Wednesday on the status of reform in the telecom sector and the government's action to transform the industry, Felix Owusu-Adjapong said: "The investor should prove to the satisfaction of us all that it possesses the requisite know-how to deliver our needs adequately."
He said the investor should also be in a position to pay a fair and reasonable price for a portion of Government of Ghana shares in Ghana Telecom that would be offered for sale.
Mr Owusu-Adjapong said it was not possible to state how many shares the government would put on offer. It is not appropriate to make any such pronouncements at this time when negotiations and discussions were still going on, he said. "We are still testing the market and when things are ready we will let you know the government's position on the issue of number of shares to be sold."
The Minister described the fixed line as one, which allows one to make a broadband telephone connection to the computer so that voice, data, Internet, video conferencing and other applications could be transmitted at competitive tariffs.
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Ho (Volta Region) 21 February 2002- Mr Kwasi Owusu-Yeboa, Volta Regional Minister has made representations to the management of the Ghana Oil Company Limited (GOIL) to reconsider its decision to close the company's regional office at Ho under its restructuring exercise.
While conceding that GOIL as a business venture, had to make profits and pay dividends to its shareholders, he said the company was state owned and needed to do business with the provision of social service in mind.
Mr Owusu-Yeboa was interacting with a five-member management team of GOIL led by Mr Yaw Agyeman-Duah, Managing Director on Tuesday, at Ho. He expressed fears that if GOIL pulled out from the region it would dislocate services and create shortages.
He said the region was large and the fuel demands for food haulage trucks, which operated from the less accessible areas of its northern sector, lake-transporters and fishermen must be met.
Mr Owusu-Yeboa said the pre-mix fuel market was large enough to sustain GOIL in the region and pledged to help the company to regain its leadership role in the region. Mr Agyeman-Duah said GOIL's new marketing strategy, under which the region was to be split was not aimed at marginalising the region.
Under the programme, the Southern sector of the region would be handled from Tema, while the Northern half would have its offices at 'Mame Water', near Juapong.
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Accra (Greater Accra) 21 February 2002- The GSE All-Share Index climbed on Wednesday on the strength of a 50-cedi gain by Unilever Ghana Limited.
The index, the main market indicator, ended up by 1.65 points at 966.17 from 964.52 points on Monday. Change for the year also climbed to 1.07 per cent from 0.90 per cent and market capitalisation was higher at 3,923.83 billion cedis from 3,920.64 billion cedis.
On the broader market, there were two price changes. Unil was up 50 cedis at 2,550 and SSB bank Limited gained one cedi at 2,201 cedis. Total shares traded stood at 523,700 cedis with Standard Chartered Bank, the highest priced equity, selling 480,100 shares. The following are the closing prices of the equities in cedis:
ABL 320
AGC 18,800
ALW 4,300
BAT 627
CFAO 60
EIC 3,117
FML 950
GBL 1,000
GCB 1,580
GGL 910
HFC 945
MGL 241
MLC 146
MOGL 18,502
PAF 750
PBC 450
PZ 1,051
SCB 20,552
SPPC 342
SSB 2,201 +1
UNIL 2,550 +50
CMLT 430
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