GHANA’S 2008 BUDGET RECEIVES US$ 145 MILLION SUPPORT FROM THE WORLD BANK

The Minister of Finance and Economic Planning, Hon. Kwadwo Baah Wiredu, MP and the World Bank Country Director for Ghana, Ishac Diwan, have signed the Sixth Poverty Reduction Support Credit (PRSC-6) for an amount US$ 145 million in fulfillment of its commitment to providing assistance annually through the budget, under the Multi-Donor Budget Support (MDBS).

Hon. Kwadwo Baah Wiredu, said proceeds of the credit being signed would be used to support the implementation of the 2008 budget and by extension contribute to the attainment of key policy targets outlined in the budget.

These target he said, includes a real GDP of at least 7.0 percent, accumulation of international reserves of at least three months of import cover and an overall budget deficit of 4.0 percent of GDP.

The Minster noted that the increasing crude oil prices has dominated the news headlines throughout the world and added that, over the past two years, the nation’s crude oil import bill has risen from USD500 million in 2005 to USD2.1 billion as at the end of last year and it is estimated to reach USD2.5 billion.

He also added that, the soaring price of crude oil has presented significant challenges as the current budget was prepared on an estimated crude oil price of USD85 per barrel, adding “if the price should hit US$150 per barrel, it is projected that an additional cost of US$ 2.14 billion will be incurred”.

He mentioned the President’s announcement of series of interventions meant to cushion the ordinary Ghanaian, against the higher crude oil prices coupled with the escalating food prices. These include, removal of excise duty and debt recovery levy on premix oil to assist our fishing communities, reduction of excise duty and debt recovery levy on gas oil, kerosene and Marine Gas Oil, increasing support for the production cost of electricity to bring relief to domestic consumers.

“By implementing these interventions, significant revenue that should have come to the budget will be forgone. This will obviously put a strain on the budget and reduce our ability to provide more development projects for our people”, he said.

The World Bank Country Director to Ghana, Mr. Ishac Diwan in his remarks said the three credits consist of Poverty Reduction Support Credit (PRSC-6) of US$100 million, Natural Resource and Environmental Governance (NREG) making up US$20million and Agriculture Development Policy Operation (AgDPO) of US$25million.

The PRSC-6 he said, remained the cornerstone of donor support for Ghana‘s poverty reduction strategy, while the NREG and AgDPO provide new important support for policy reform on natural resources and environment as well as the agriculture sector.

He noted that the Policy Action under the PRSC-6 focuses on the implementation of various reform programs to accelerate private sector-led growth by facilitating private sector development and increasing agricultural productivity and exports among other things.

The signing was witnessed by Officials from the Ministry of Finance and Economic Planning and the World Bank.

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