Implementation of Measures to Reduce Economic Hardships would not Derail Budget Targets – Dr Osei

Dr. Anthony Akoto Osei, Minister of State at the Ministry of Finance and Economic Planning has assured the country that targets set in the 2008 budget statement and economic policy are achievable.

He said though the measures announced by H. E. the President to mitigate the rising crude and food prices would cost the country 92.47 million, revenue from divestiture receipts and measures introduced in the energy sector would improve the fiscal position of the budget as well as shore up the foreign exchange reserves.

“Currently, there is some surety that targets in the 2008 Budget will be achieved. Work is almost complete to substantially enhance divestiture receipts to close the gap that will be created by the relief measures announced by H.E the President.

The enhancement in divestiture receipt will improve the fiscal position of the budget and shore up foreign exchange reserves, reducing the pressure on the Ghana cedi”, he explained.

Dr Osei said this when he briefed the media on the state of the economy today and to outline further measures to ensure the economy is not derailed by the rising commodity and crude oil prices.

He said to help reduce crude oil bill, the emergency power plants would be shut down while the hydro component of the generation mix would be increased. “in addition, some free flow of gas from the West Africa Gas Pipeline has started, and the supply is expected to be accelerated”, he said.

Shutting down the power plants and increasing the hydro component of the generation mix would drastically reduce crude oil imports, he explained.

High voltage consumers of electricity such as mining companies and steel mills would pay a bulk generation tariff of 16.91 Ghana pesewas per kWh, which translates into end user Tariff of 22.31 Ghana pesewas per kWh.

Other category of consumers would however, would pay the current rate till the end of the year.

Ghana’s crude oil import bill has risen from US$D500 million in 2005 to US$D2.1 billion as at the end of 2007 and is moving to US$D2.5 billion for the same quantity of oil this year.

Dr Osei said while the revenue agencies are urged to improve on revenue mobilization, expenditure is being cut to ensure non-developmental capital expenditure is reduced as much as possible.

He said further that government after acquiring the final 10% shares of VALCO, intend to off load some of the shares to other partners in due course.

On the cost of the measures announced on the economy, he said, direct revenue loss as result of the removal of the tariffs is GH¢92.47 million.

It would be recalled that H. E. the President announced for immediate implementation measures to reduce the effect of the crude and commodity prices on Ghanaians.

These includes; the removal of import duties on rice, wheat, yellow corn and vegetable oil; the removal of excise duty and debt recovery levy on premix oil; a reduction in the excise duty and debt recovery levy on gas oil, kerosene and M. G. Local (Marine Gas Oil); and increase in government support for the production cost of electricity to bring relief to domestic consumers.

Also, subsidization of the cost of fertilizer and ensure effective distribution to farmers to assure a good harvest, importation and stock-piling of additional supplies of rice and wheat to enhance food security and increased supply of tractors at subsidized rates to farmers.

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