GRi Business News 27-01-99

Accra (Greater Accra) 27 Jan.

 Gross investment in the country is programmed to increase from 14 per cent of Gross National Product (GNP) in 1991 to 22.4 per cent by next year while growth rate is estimated at 10 per cent.

This is part of projections under Ghana-Vision 2020, the Medium-Term Development Plan (1997-2000) released in Accra on Tuesday. The document said private investment will be the engine of growth, accounting for a greater part of investment. Private sector share of investment will rise from under 11 per cent of GNP in 1995 to 13 per cent by 2000 as against public investment which is expected to rise from 6.5 per cent in 1996 to 9.5 per cent in 2000.

"In line with the objectives of the Ghana-Vision 2020 (The First Step), the focus of public investment expenditure or allocation will be to consolidate past and existing development programmes and projects with a view to strengthening their effectiveness."

The document, a blue print for socio-economic development, said government would take appropriate measures to improve the implementation and co-ordination of public sector programmes and enhance viability of public sector projects. Government would also ensure that current development programmes being undertaken by Ministries, Departments and Agencies (MDAs) "reflect the new national development policies and priorities requiring MDAs to review all on-going government projects in order to determine projects that need to be abandoned or hives off to the private sector and projects to be continued and realigned with objectives of Ghana Vision 2020."

The document said the estimated public sector development expenditure needed to attain the objectives of the medium-term development plan is 5,800 billion cedis for the period 1996-2000 or 3,470 billion cedis in 1995 prices.

This represents an increase of about 200 per cent over the expenditure of 1,147 billion cedis during the 1991-1995 period. The document said a major portion of the total public sector development expenditure is expected to be allocated to economic and social programmes with the former taking up about 50 per cent and the latter 21 per cent. Expenditure for defence, internal security, development management and general administration will account for the remaining 29 per cent.

It said of the 2,929 billion cedis development expenditure allocated to the economic sector, the road and waterway sub-sector will be given the highest priority, taking 1,739 billion cedis or 30 per cent of the amount.

"This expenditure is for upgrading existing roads and building new ones in all the regions, including the rural roads, and for improving rural-urban link as well as upgrading port facilities in line with making Ghana a hub or "gateway" for handling transit cargo to land-locked countries in the northern parts of West Africa and other African countries."

Accra, Jan. 27,

Government revenue is expected to exceed current expenditure by about 4,420 billion cedis during the Medium-term Development Plan period (1997-2000), the Government's Vision 2020 document has indicated.

This compares with 1,115 billion cedis during the 1991-95 period.

The document released in Accra on Tuesday, said while the current account will be in surplus in each year during the Plan period, the estimated development expenditure amounting to 4,625 billion cedis will result in an overall budget deficit of 205 billion cedis during the period.

"Although this deficit (in nominal terms) is about five times the deficit during the period 1991-95, the ratio of overall budget deficit to Gross National Product (GNP) is expected to decline from 1.6 per cent in 1991 to 0.7 in 2000."

The document said the deficit will be financed by domestic and external borrowing.

"However, the mobilisation of resources to finance the deficit will be pursued in ways which will not create inflationary pressures on the economy or crowd out private sector credit needs", the document added.

The document said the revenue of central government is expected to rise by 22 per cent to 4,870 billion cedis next year.

Direct taxes are expected to account for 4.5 per cent, about the same percentage as non-tax revenue.

These include receipts from divestiture of state-owned enterprises and income from Non-Performing Assets Recovery Trust (NPART), plus non-revenue receipts or grants, mainly from abroad.

Revenue from direct taxes is expected to grow by 28 per cent per annum, following the growth of incomes and improvements in the tax collection machinery.

The document said despite the proposed review of taxes, which inhibits growth and the commitment of Ghana under the World Trade Organisation on taxes on foreign trade, indirect tax is projected to grow by 29 per cent per annum with the re-introduction of the value added tax (VAT).

This will make indirect tax 14.6 per cent of GNP or 63 per cent of total revenue receipts in the year 2000.

"This optimistic rate of growth is premised on anticipated increases in the volume of domestic and foreign trade and accelerated growth of domestic production."

The document said central government's current expenditure is estimated at 13,087 billion cedis over the period 1996-2000.

"Although this nominal amount will be nearly four times the amount spent during the 1991-95 period, current expenditure is expected to grow at 21.7 per cent per annum during the Medium-Term Development Plan period, compared with 45 per cent per annum during the period 1991-95.

The document said the wage and salary bill will account for about 50 per cent of total current expenditure, while other major commitments include debt-service payments, purchase of supplies and transfers to public boards, corporations and local authorities.

In terms of sectoral allocation, social services are estimated to absorb the largest amount of the total current expenditure reflecting government's commitment to the provision of increased availability and improved quality of social services, especially in the rural areas.

It said efforts will be directed to increase productivity and efficiency in the public service as an essential means to contain the future growth of current expenditure.

Accra(Greater Accra) 27 Jan.

Ghana and China today signed an agreement for 50 million yuan (about six million dollars) which will be used on agreed private sector projects in Ghana.

Mr Dan Abodakpi, Deputy Minister of Trade and Industry signed for Ghana while Mr Sun Guan Gxiang, Chinese Deputy Foreign Trade Minister, signed for his country.

Specific details for the use of the facility would be worked out later.

The agreement followed two hours of bilateral talks between the two sides presided over by Vice-President John Atta Mills and his Chinese counterpart, Mr Hu Jintao.

Mr Hu arrived in Accra on Tuesday at the head of a 30-member delegation for a three-day visit at the invitation of Vice-President Mills.

Those present at the talks included Mr Kwame Peprah, Minister of Finance, Dr John Frank Abu, Minister of Trade and Industry, Mr James Victor Gbeho, Minister of Foreign Affairs, Mr Enoch Teye Mensah, Minister of Youth and Sports, Mr Mike Akyeampong, Deptuy Minister of Agriculture, as well as other members of the Chinese delegation.

Mr Abodakpi told reporters that discussions focused on political and economic co-operation between the two countries and peacekeeping in the West African sub-region.

He said they also discussed direct economic and financial support and Chinese participation in agriculture and food processing.

"We also looked at potential support from China in sports development," Mr Abodakpi said, adding that there were proposals to the Chinese to help build a sports complex for Ghana.

He said Ghana appealed to China to encourage her private sector to participate in the free zone programme through direct investment.

Mr Abodakpi described the talks as very fruitful saying, "there has been a positive response from the Chinese."

He said the two government would continue with discussions to arrive at definite conclusions over a wide area.