Osafo-Maafo says gov’t committed to poverty reduction
Accra (Greater Accra) 09 November 2001 - Mr Yaw Osafo Maafo, Minister of Finance, said on Thursday that the 2.6 trillion cedi budgetary deficit carried over from the last administration has been cleared.
"With our own modest adjustments, efforts regarding extra revenue generation and expenditure cut-backs, as well as additional resources from our development partners, including benefits from HIPC, the gap has been closed. We can now talk about a fully-financed budget"
Mr Osafo-Maafo who was presenting a mid-year review of the 2001 budget in Parliament, said the government would keep a constant vigil on all critical areas of the economy, adding, "An uncompromising fiscal prudence is non-negotiable."
"Given our chequered economic history and the fragile economic situation that the world faces today, it is required that we remain steadfast and committed in our resolve to continue the arduous but very possible task of repairing the damage done to this economy".
He said: "We owe this to the people of Ghana, and we must not fail them...It is evidently clear that the NPP government has set the country on the path for economic development. Let us together build a prosperous nation for generations unborn."
The Minister said the achievements chalked so far included the stability of the value of the cedi, continuous reduction in the rate of inflation, keeping expenditure under control and containing domestic borrowing.
"We have improved on the overall fiscal out-turn and introduced strategic initiatives to improve the general economic environment, including the restructuring of the domestic market. While we have made considerable headway, much more needs to be done."
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Accra (Greater Accra) 09 November 2001 - The Value Added Tax (VAT) collections amounted to 971.8 billion cedis as against a target of 907.6 billion cedis during the first half of the year.
The good performance was mainly due to high level of compliance and overall improvement in the VAT administration, Yaw Osafo-Maafo, Minister of Finance told Parliament on Thursday when he presented the mid-year review of the 2001 budget statement and the economic policy of the government.
Mr Osafo-Maafo said indirect taxes performed above target for the period realising 1,403.2 billion cedis, 31.8 billion cedis more than projected.
He said direct taxes yielded 847.3 billion cedis as against a target of 1,001.5 billion cedis, which showed a shortfall of 154.2 billion cedis. "It must be mentioned however that some large collections exceeding 100 billion cedis in June that could only be accounted for in July, explained much of the shortfall.
Also, the legislation for the effectiveness of the increase in withholding of tax from five per cent to 7.5 per cent was not passed until July, thus affecting revenue levels".
The Minister said another reason for shortfalls in direct taxes was the erosion of assessable incomes of companies as a result of accelerated depreciation allowances that wiped off the tax liabilities of some companies last year.
Mr Osafo-Maafo said by the end of June this year the expected yield from the national reconstruction levy fell short by 23 billion cedis. "Admittedly, the slow down of government payment to contractors has had a negative impact on the collection of withholding taxes, aside from the lower rate of five per cent that prevail during the period".
Mr Osafo-Maafo said for the period of January to June total receipts amounted to 5,021.0 billion cedis compared to the half-year target of 6,382.1 billion cedis. Tax revenues of 2,852.4 billion cedis fell short of 144.3 billion cedis.
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Accra (Greater Accra) 09 November 2001 - Ghana's trade balance recorded a deficit of 277.3 million dollars during the first half of this year.
Cocoa exports receipts amounted to 238.6 million dollars while gold earned 317.7 million dollars. Timber exports contributed 87.8 million dollars to total exports during the period.
Earnings from other sources including non-traditional exports amounted to 321.1 million dollars, Yaw Osafo-Maafo, Minister of Finance told Parliament on Thursday.
Presenting a mid-year review of the Budget Statement and Economic Policy of the government, he said oil import was 255.5 million dollars and non-oil imports totalled 987.0 million dollars.
"The net balance on the services account for the period showed a deficit of 94.4 million dollars, while unrequited transfers recorded a net inflow of 334.5 million dollars, of which official transfers were 140.5 million dollars and private transfers were 193.9 million dollars.
"The capital account showed a net outflow of 1.2 million dollars, arising from a net official capital outflow of 33.2 million dollars and the net private capital inflow of 32.0 million dollars.
Mr Osafo-Maafo said the net capital inflows were not enough to finance the current account deficit, resulting in an overall balance of payments deficit of 38.4 million dollars for the half-year, which was financed by drawing down on external reserves, leaving gross external results at the equivalent of about one month of imports.
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Accra (Greater Accra) 09 November 2001 - Moses Asaga, Minority Spokesman on Finance on Thursday said the budget review presented by Finance Minsiter Osafo- Maafo was subjective of the government and did not reflect the objective financial conditions and economic effects on the ordinary man.
He said the perception about the government's fiscal policy was not creating wealth or improving the income of the people in view of glaring poverty in the country.
Mr Asaga said in an interview just after Yaw Osafo-Maafo, Minister of Finance presented to Parliament the mid-year review budget statement and economic policy of the government.
The Minority, he said, was not a party to the review, "because it was not a complete budget since the government had presented an interim one to the House in March this year".
"We were expecting that it will be a final budget since the earlier one was described as an interim one. What we have now is the review of the half-year budget".
Mr Asaga asked for time to do an in-depth study on the review since figures on interest rate, inflation, the acclaimed stability of the cedi and the GDP growth could not be taken in isolation.
He said: "we have not even been presented with the review document and the Minister was silent on productivity".
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Accra (Greater Accra) 09 November 2001 - Parliament will begin the debate on the mid-year review of the budget statement and the economic policy of the government next Tuesday, Peter Ala Adjetey, Speaker, said on Thursday after Yaw Osafo-Maafo, Minister of Finance had presented a 30-page budget review of the interim budget statement he presented to the House in March this year.
Just as the Minister started his presentation, the Minority Leader, Alban Bagbin challenged the urgent motion under which the review was to be moved.
The motion said: "That this House endorses the mid-year review of the budget statement and economic policy of the Government of Ghana for 2001 financial year".
Mr Bagbin said according to Standing Order 140 (3), which gave the House the power to approve budgets or financial statements of the government did not give it the power to endorse as the motion was asking for.
He asked who was doing the review for Parliament to endorse and that if it was to be endorsed then Parliament should do the review. Mr Bagbin said the word "endorse" was strange to Parliament and that the motion would have rather asked for approval instead of endorsement since the House was not a rubber stamp one.
Papa Owusu-Ankomah, Majority Leader, leapt to his feet and challenged Mr Bagbin's claim that the Minister was presenting the mid-year review adding "if the honourable member will be patient he will at the end know whether he had to endorse it or not".
The Majority Leader said it was only a matter of semantics and that the word endorse meant approve, support and agree. With tempers rising and the uproars becoming deafening, the Speaker had to call for order several times shouting, "cool it, cool it". He said the rate at which tempers were rising indicated that members were warming up for a debate.
Mr Ala Adjetey over ruled Mr Bagbin's point of order saying that the word endorse did not attack the fundamental objective of the motion.
The motion faced another form of heckling from the minority when Mrs Grace Coleman, a Deputy Minister of Finance was seconding it.
Mr Doe Adjaho, Minority Chief Whip, raised a point of order that since the motion was cast in the mode of budgetary one, its debate should not ensue the very day it was moved.
He quoted standing order 143, stating that debate should start at least three days after the motion was moved. Papa Owusu-Ankomah responded that standing order 143 did not cover the motion on floor since it was accompanied by a statement on the review of the budget.
"This statement was brought here today by government because it wants to facilitate debate and business in the house that is why we chose to come by way of motion."
Referring to the Minority's earlier protests to the motion, Papa Owusu-Ankomah said, "they sought solace in the moon, it did not avail now, they seek solace in their ancestors and it will not avail."
Mr Ala Adjetey upheld Mr Adjaho's objection saying that though the motion was unusual and that no standing order adequately caters for it the spirit of the rules of the House should be invoked.
When proceedings were drawing to a close, Papa Owusu-Ankomah said: "Mr Speaker, after extending a sympathetic hand to the Minority, I beg that we bring proceedings to a close."
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Accra (Greater Accra) 09 November 2001 - Yaw Osafo-Maafo, Minister of Finance said on Thursday that the Value Added Tax (VAT) service and Customs, Excise and
Preventive Service (CEPS) exceeded their revenue collection targets for the first half year.
VAT bagged 971.8 billion cedis exceeding the target of 907.6 billion cedis while CEPS collected 684.2 billion cedis, appreciably above a target of 663.8 billion cedis.
The minister was presenting a mid-year review of the 2001 budget in Parliament. He said although the Internal Revenue Service (IRS) performed creditably, it failed to achieve its target for the first half of the year.
IRS collected 847.3 billion cedis, falling below a target of 1001.5 billion cedis. Mr Osafo-Maafo attributed the poor showing to a shortfall in company taxes, due to poor performance of companies during the year 2000.
"The target for the non-tax revenue was also not achieved due to late implementation and unforeseen problems with regard to the airport tax and the increases in user fees and charges, which have now been rectified."
He said expected tax revenue from import tax went up from 1010.2 billion to 1,086.2 billion. "Expected international trade taxes as a whole, however, has declined as a result of a downward revision in export duty from 371.8 to 255.1 billion due to the law revenue yield from cocoa receipts."
He said as a result of what happened in the course of the year as well as revision in some revenue items, total payments have also been revised from 13,826.7 billion cedis to 13,073.8 billion cedis, showing a corresponding net downward revision of 752.9 billion.
Mr Osafo-Maafo said external debt servicing has been revised downwards by 2,749.2 billion cedis. "This substantial reduction is mainly due to our decision to take advantage of the Highly Indebted Poor Countries (HIPC) initiative which has resulted in our withholding of payments of bilateral debt."
He said interest payments on domestic debt have been revised upwards by 5690 billion cedis, reflecting a higher stock of domestic debt after an in-dept inventory of the stock of debt instruments and the projected cost of servicing that stock.
"Some adjustments have been made to the District Assemblies Common Fund and the Ghana Education Trust Fund (GETfund), in tandem with the new revenue levels. The net effect of these revisions show a decline in statutory payments by 2,195.2 billion."
He said discretionary payments have been revised upward by 1,442.1 billion cedis. "Personnel emoluments have increased by 4.9 billion. Expenditure on Administration and Service has been revised upwards by 98.2 billion cedis to reflect the earlier increases in utility bills and fuel prices."
He said total investments have gone up by 1,251.2 billion cedis mainly attributed to foreign-financed investments activities.
Mr Osafo-Maafo said a monitoring mechanism known as quarterly expenditure ceilings has been approved by Cabinet and appropriation by Ministries, Departments and Agencies, have had to be contained within those ceilings.
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Accra (Greater Accra) 09 November 2001 - The Cedi was relatively stable against almost all the major currencies in both the inter-bank and the forex bureaux markets during the first half-year of 2001.
Yaw Osafo-Maafo, Minister of Finance announcing this in Parliament on Thursday said the stability of the cedi "was in contrast with developments in 2000 when the cedi depreciated sharply and continuously against the major currencies".
The Minister who was presenting mid-year review of the budget statement and economic policy of the government, said in the inter-bank market, the cedi/dollar exchange rate increased from 7,047.65 cedis at the beginning of the year to 7,227.00 at the end of June.
It indicated a depreciation of 2.5 per cent for the half-year, which was lower than the depreciation of 37.6 per cent recorded for the corresponding period of last year, he said.
Mr Osafo-Maafo said the reasons for the stability of the cedi exchange rate included the prudent fiscal and monetary policies of the NPP Government and the increased confidence of Ghanaians in such policies.
"Furthermore there was a reduced demand for foreign exchange to service bilateral debts as a result of Ghana's decision to access the Highly Indebted Poor Countries (HIPC) initiative.
"Indeed, as Ghanaians become more certain about the direction of government policies, it is expected that confidence will grow and discourage the extrapolative expectations of the depreciations of the cedi which also feed back into price increases", the Minister said.
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Accra (Greater Accra) 09 November 2001 - The Government has paid about 70 billion cedis as bonuses to cocoa farmers for the 2000/2001 main crop season.
It has also approved an increase in the producer price of cocoa from 3,872,000 cedis per tonne to 4,384,000 cedis per tonne, for the 2001/2002 main crop season, representing an increase of 35 per cent over the price for the previous main crop season.
Mr Yaw Osafo -Maafo, Minister of Finance said this when he presented a Mid-Year Review of the Budget Statement and Economic Policy of the Government in Parliament on Thursday.
He said in order to improve upon the husbandry of cocoa farms and to generate employment, the Government undertook to carry out a National Cocoa Diseases and Pests Control exercise.
The Minister said in all, 21,000 people have been employed for the exercise, covering a total of 1.3 million hectares, which started in the Volta Region in late August this year. The exercise, which is expected to be completed in December involves the treatment of Blackpod disease and capsid damage.
Mr Osafo-Maafo said the Cocoa Research Institute of Ghana (CRIG) has indicated that the timing of the spraying of cocoa farms was within the recommended spraying period.
He said a report prepared in August 2001 by CRIG on the exercise indicated that in the Volta and parts of Brong Ahafo, Ashanti and Western regions where the severe form was present, the black pod disease infections had just started.
The report said with respect to capsid control, four effective spray applications could still be done since "we are still within the recommended spraying period, that is August to December".
"It is worthy to note that the fungus which causes the black pod disease is water-loving and is inactive during the dry periods. Fortunately the rains this year have either been late or erratic in some places and as such the onset of the disease has delayed in most places this year".
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Accra (Greater Accra) 09 November 2001 - Yaw Osafo-Maafo, Minister of Finance said on Thursday that the government has placed poverty reduction on top priority with the President's launch of the Emergency Social Relief Programme (ESRP) last July.
He told Parliament in his presentation of the mid-year review of the 2001 budget that the ESRP, which is a component of the Ghana Poverty Reduction Strategy, was concerned with immediate interventions to reduce poverty among the poorest in priority regions and districts of the country.
He said the President's Special Initiative (PSI) on accelerated development has two components, which have been identified for support.
The Integrated Action Programme for Cassava Starch Production and Export was designed to develop the cassava industry as a major vehicle for job creation and poverty reduction in rural communities.
The Export Action Programme for garments and textiles was intended to develop a critical mass of high growth-oriented, internationally competitive exporting firms in the garments and textiles sector, targeting the American and European consumer markets.
Mr Osafo-Maafo said tax administration would also be streamlined by minimising bottlenecks, which impeded tax compliance by businesses.
He said companies that had shown good track record of complying with tax obligations, need not produce a tax clearance certificate at each single import.
The Internal Revenue Service (IRS) is to develop a set of criteria to classify such companies as "Class A" importers who would use one tax clearance certificate for each calendar year.
Mr Osafo- Maafo said henceforth, consultants bidding for jobs would be required to show record of taxes paid in addition to tax clearance certificate. Consultants can only be awarded government contracts if their tax obligations have been met for the immediate past three years.
He said a circular was sent to all Ministries, Departments and Agencies to provide the list of consultants working for them and this list has been forwarded to the IRS to verify tax compliance.
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Accra (Greater Accra) 09 November 2001 - The Ministry of Local Government and Rural Development has abrogated the agreement for the supply of vehicles by Africa Automobile Company (AAC) with effect from September 29, 2001 following the company's inability to honour its contractual obligation.
The AAC was to supply the Ministry with 87 Units of Galloper 4 X 4 Station Wagons, three units Hyundai Skip Loaders, three Cesspit Emptiers and 60 Skip Containers totalling 13 billion cedis, Kwadwo Baah-Wiredu, the Minister announced in Parliament on Thursday.
Answering an urgent question by Mr Emmanuel Adjei Boye, NPP-Krowor, who wanted to know whether it was true that the ministry, under the previous administration, ordered 110 vehicles for which over 14 billion cedis had been paid to African Automobile Limited and measures being taken to retrieve the money or get the vehicles delivered, Baah-Wiredu said the company was ordered to refund the total deposit of 13 billion cedis less the cost of the 23 Gallopers already supplied.
It is also supposed to pay appropriate interest on the outstanding balance and to return to the ministry the 22 Mitsubishi Pajero deposited by some beneficiary District Assemblies.
He said as part of efforts to provide logistics support to the assemblies, the ministry ordered the vehicles to replace those allocated to District Chief Executives in 1994.
Under a trade-in-agreement with the company the assemblies were to surrender their Pajero vehicles to the company to offset some of the cost of the Gallopers to be supplied.
Mr Baah-Wiredu said the Company promised to deliver 60 units of the vehicles by November 2000 and the remainder two weeks later but this promise was not fulfilled.
"As at today the company has supplied only 23 out of the 110 vehicles ordered and these have been allocated to some District Assemblies".
He said reports received from the beneficiary districts indicated that the vehicles were of poor quality and not strong and robust enough for the work of a District Chief Executive.
The minister said in the light of the adverse reports about the performance of the vehicles and the fact that the company failed to honour its contractual obligation, series of meetings were held to find solution to the problem.
Mr Baah-Wiredu said the company wrote saying they had accepted to supply Mitsubishi Pajero Cross Country vehicles instead of the Galloper and that they had notified their suppliers for their earliest delivery.
"Despite the company's own realisation of the unsuitability of the Gallopers and despite the receipt of the ministry's letter of abrogation, the company wrote again on October 22 to inform the ministry that the remaining 87 Gallopers had arrived at the Tema Harbour for clearance".
Mr Baah-Wiredu said he informed the company that the ministry's letter of abrogation still stood and that the ministry was in the process of arranging for more durable four-wheel drive vehicles for the district assemblies.
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