Kwadwo Baah-Wiredu, M.P.
MINISTER OF FINANCE AND ECONOMIC PLANNING
on the authority of
His Excellency John Agyekum Kufuor
PRESIDENT OF THE REPUBLIC OF GHANA
REPUBLIC OF GHANA

FOREWORD
1. The sacrifices the nation has made over the past couple of years have
yielded the desired positive results, such that the economy is resilient, even in
the face of rising crude oil prices. Government remains committed to those
polices that have brought the nation this far.
2. On the eve of our 50th anniversary as a nation, I am happy that our
economy is vibrant and the aspiration of attaining the status of a middle-income
country in the next decade is within our reach.
3. With vigorous infrastructural development, the introduction of the National
Health Insurance Scheme, Capitation Grant, Free Bussing and the School
Feeding Programme for children and the establishment of financial schemes for
micro, small and medium sized enterprises, we have made significant gains
towards the Millennium Development Goals. Indeed, we are likely to attain some
of these goals before the UN deadline.
4. Economic growth has exceeded targets for three consecutive years. This
year, the recorded growth of 6.2 percent exceeds the target of 6.0 percent, and
for next year, 6.5 percent is the confident forecast.
5. Progress made is recognized by the international community: Ghana has
been rated the most peaceful nation in Africa, given a B+ sovereign credit rating,
ranked the fastest reforming nation on the continent and 9th in the world in
doing business.
6. But, there are problems at the labour front, resulting partly from a
distorted public sector salary structure which is also poorly administered.
7. Government has, therefore, decided to use this budget to begin the
implementation of a new comprehensive public sector pay reform that
emphasises equal pay for work of equal worth. The broad objective is to aim for
wage increases in line with productivity gains, cost effectiveness and efficiency.
8. "Rome was not built in a day", as the adage goes. Today, we are laying
the first block for a more rational salary structure and administration.
9. Government realises, however, that this new system will have to be
phased in, but we will continue to implement the social policies and programmes
that will accelerate the growth we need to achieve our target.
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10. To ensure order and equity all round, government is setting up a Fair
Wages Commission to oversee the implementation of this new programme.
11. The public sector reforms that are being pursued will be sustained to
boost private sector development through an enhanced public services delivery,
in order to deepen the public-private sector partnership for accelerated growth.
12. I am, therefore, appealing to the nation and all its sectors to hold fast and
rally together so that we pursue a collective vision in the belief and confidence
that Ghana will succeed in becoming a middle income country by 2015.
13. This is a budget to promote growth and stability for all. Ghana is on the
path to sustained Economic Renaissance.
14. God Bless us all. God Bless Ghana.
HIS EXCELLENCY J. A. KUFUOR
PRESIDENT OF THE REPUBLIC OF GHANA
16TH NOVEMBER, 2006
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1. Mr. Speaker, By the Authority of His Excellency the President, John
Agyekum Kufuor, I have the honour to present Government's Budget and
Economic Policy Statement for year, 2007.
2. Mr. Speaker, I beg to move that this honourable House approves the
Financial Policy of the Government for the fiscal year ending 31 December
2007.
3. Mr. Speaker, in doing so, I wish to read out an abridged version of the
Budget Statement and I implore the Hansard office to capture the entire
Statement comprising ten Sections.
4. Mr. Speaker, I wish to start with the Foreword of His Excellency, John
Agyekum Kufuor, the President of Republic of Ghana.
Golden Jubilee Budget
5. Mr. Speaker, we are exactly 110 days from the 50th Anniversary of our
country's birth as the first colony in black Africa to become an independent
sovereign nation.
6. The Government is proud to usher this nation into this memorable era of the
50th Anniversary.
7. Mr. Speaker, Government prays that we can rekindle the same unity of
purpose and determination that propelled our founders, to pursue the
common goal that gave us our freedom 50 years ago to promote the
common interests of all of our people.
8. The implementation of policies that the Government has pursued has given
birth to the economic renaissance of Ghana, thus restoring the nation to its
status at independence as a shining star of Africa.
9. Mr. Speaker, the theme of the GOLDEN JUBILEE year Budget is ‘GROWTH
WITH STABILITY: Towards Fair Wages'.
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10. Mr. Speaker, in order for Ghanaians to appreciate the status of the
national economy, I provide the following figures for 2007.
i. The size of the economy is estimated to be ¢138 trillion
ii. The GDP growth rate is expected to be 6.5 per cent by end 2007;
iii. The "WISH LIST" (Needs and Wants) of all MDAs is ¢100 trillion
iv. The Spending Target is ¢54.3 trillion;
v. The Domestic Revenue Target is ¢37.5 trillion;
vi. The Gap therefore is ¢ 16.9 trillion; this is to be filled by:
a. Grants of ¢9 trillion;
b. Loans of ¢ 6 trillion;
c. Divestiture of ¢0.7 trillion;
d. Lotteries of ¢0.1 trillion;
e. Others ¢1.2 trillion.
Programme Framework and Allocation of Resources
11. Mr Speaker, the coming year marks the second year of implementation of
the Growth & Poverty Reduction Strategy (GPRS II), which forms the focal
point for achieving the Government's prioritised goals for the country's
development.
12. Mr. Speaker, the thrust of GPRS II is to speed up the promotion and
acceleration of wealth creation at the core of our economic activities.
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13. GPRS II is therefore to be viewed as the principal instrument for achieving
our goal of becoming a middle income country by the year 2015, which is
just eight short years away.
14. Mr Speaker, Government will therefore use the framework of GPRS II
underpinned by the three focal themes of:
i. Private Sector Development;
ii. Human Resources Development
iii. Good Governance;
to guide the policies, projects and activities planned for 2007.
15. Mr. Speaker, The programmes and activities planned for the next year
will aim to achieve three broad objectives, namely:
i. To introduce and implement measures that will make the private
sector perform better with special emphasis on agriculture and
industry;
ii. To foster the development of a knowledgeable, well-trained and
disciplined labour force that provides the backbone to private sector-
led economic growth; and
iii. To empower public and private sectors to engage fully in the
development of our country and team up effectively to maintain the
peace and stability that has underpinned our economic success of
recent years.
16. Mr. Speaker, this year, two long standing problems - wages and energy
- have reached crisis proportions and threaten the political and economic
health of the country.
17. Mr. Speaker, the Government will deal with these problems head-on in
the 2007 budget.
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PUBLIC SECTOR WAGE REFORM
18. Mr. Speaker, the events on the labour front this year have posed serious
challenges to the economic and political stability of the country.
19. Government recognizes the legitimate agitations raised across the board
in the public services about the inequities in the administration of wages
and salaries.
20. Mr. Speaker, over the past 6 years, average monthly wages for public
servants have increased by 360 per cent.
21. On the Ghana Universal Salary Structure (GUSS), this has meant on
average a move from ¢114,750 (US$17) in 2001 to ¢528,120 (US$58) in
2005.
22. Mr. Speaker, the public service of Ghana is currently made up of 650,000
employees of which 350,000 are employed by 110 subvented
organizations.
23. In 2006, the public sector wage bill is expected to be ¢11 trillion or 40 per
cent of government's discretionary expenditures.
24. In 2007, government is projecting a wage bill of ¢13.2 trillion which
represents 66 per cent of total discretionary expenditure.
25. Mr. Speaker, in order to meet this substantial commitment and keep
within the framework of not spending more than we earn, Government is
having to make significant cuts to other essential cogs of national
expenditure.
26. Mr. Speaker, let me illustrate the difficulty posed by the wages problem
with what many will consider to be sound proposals submitted to
Government by the Ghana National Association of Teachers (GNAT) for
2007.
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27. Mr. Speaker, the sum of GNAT's proposal to Government amounts to to
¢28.4 trillion. This is 89 per cent of the cash revenue of ¢32 trillion
targeted for 2007.
28. Put another way, the expectations of the largest public sector group is
almost twice that of the Government's total projected wage bill.
29. Mr. Speaker, it is quite clear that we cannot meet all of the workers
expectations within the modest levels of total revenues available to us.
30. The failure over the years to achieve a framework for rational discussion
and decision-making over wages has led to various radhoc solutions.
31. As a result, there are currently several different salary structures fuelling
tensions within the public services.
32. Mr. Speaker, it is now time to take a decisive and long lasting action to
rationalize the public sector wage issue once and for all.
33. Consequently, government has decided to implement a new framework
within which public sector salaries, wages, negotiations, grading and pay
administration will be implemented.
34. Mr. Speaker, the 2006 Budget Statement affirmed the government's plan
to phase in a comprehensive pay reform programme over a 3-year period.
The broad policy of government continues to be the enhancement of
wages in line with increases in productivity and streamlining the
administration of payroll.
35. During 2006, two important consultations were held with participation
from organized labour, private sector employers and the government to
find ways of addressing the problem of low wages and salaries.
36. A technical team has also been working to develop recommendations on
wage and salary administration with the support of a Steering Committee
made up of stakeholders.
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37. The final results from this work will be a comprehensive pay structure and
system that:
i. Links the public sector pay structure with productivity, position and
qualification;
ii. Maintains the competitiveness of public sector incomes relative to the
private sector;
iii. Determines the optimal number of workers to effectively and
efficiently support the delivery of public services. Particular emphasis
will be placed on the subvented organizations;
iv. Proposes a package of incentives for employees who will opt for
early retirement and out placement as we embark on a programme
of right sizing and right matching; and
v. Carries out job content and evaluation analysis.
38. To demonstrate the continued commitment to the pay reform agenda,
government proposes to establish a Fair Wages Commission to administer
the new Comprehensive Pay Structure, maintain its integrity and ensure
equity on an ongoing basis.
39. With the establishment of the Fair Wages Commission (FWC), the
mandates of existing institutions with similar roles such as the Central
Management Board, Public Service Commission and the Appellate Body
will be rationalised.
40. Mr. Speaker, the Commission will be required to deliver to government, a
detailed and holistic employment reform programme to be implemented
over a 3-5 year period.
41. Mr. Speaker, in 2006 government implemented measures to consolidate
the various payroll systems into the Integrated Personnel and Payroll
database.
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42. This initiative is expected to be completed in 2007. This consolidation will
enable us to improve the monitoring of payroll expenditures and eliminate
the incidence of ghost workers.
43. Mr. Speaker, further steps to enhance productivity include the mandatory
installation of biometric clock-in technology in all public institutions. The
results of these reforms are expected to be a lean and more efficient
public service.
44. To show government's commitment to the reform programme, there will
be no new permanent additions to the public sector payroll unless market
conditions dictate otherwise.
45. Mr. Speaker, the implementation of Phase 1 of the rational and
comprehensive Public Sector Pay Structure means much of the distortions
in the GUSS has been removed.
46. Phase II, to be completed sometime in 2007 will involve assessment of
job content together with the consequential placement of all public sector
employees.
47. The resulting pay increase will then be completed in 2008. Accordingly,
the GUSS salary structure will be abolished in 2007.
48. Mr. Speaker, I wish to assure Ghanaians that by the end of
implementation of this new salary structure, every public sector employee
would have received an enhanced salary.
49. Mr. Speaker, the necessary financial outlay resulting from these
adjustments have been programmed in the 2007 budget.
50. Mr. Speaker, these measures must be seen in the context of the wider
goal of reengineering government to make it more efficient and to
maintain a high level of service consistent with our resources.
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51. To keep our fiscal targets on track, government will be looking for
opportunities to eliminate public institutions that are no longer needed
and to consolidate and streamline institutions whose activities overlap.
52. Decentralization and devolution will be stepped up to improve the
efficiency of government.
ENERGY
53. Mr. Speaker, Government is determined to find a long lasting solution to
the present power problem because the economy can only attain the
desired growth with the provision of reliable and continuous energy.
54. Consequently, an amount of US$470 million from MDRI and loans will be
invested over the next 3 years to improve the energy generating capacity
of the country.
55. Mr. Speaker, the medium-term strategic goal for the energy sector is to
restore the power generating capacity of the country and also upgrade
the infrastructure in order to improve the reliability of power supply.
56. The needed institutional and regulatory reforms required to improve the
operations of the power sector will, therefore, be made.
57. Mr. Speaker, the government will fast track the generation capacity
additions in order to ensure the availability of power.
58. The 125 MW Osagyefo barge and the 126 MW power plant which VRA
is procuring this year will be operational by August 2007.
59. A 300 MW thermal power plant will be installed in Tema by 2009.
60. Mr. Speaker, financing arrangements for the expansion of the Takoradi
International Company power plant by 110 MW is to be completed to
enable construction to begin in 2007.
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61. The VRA, the Mining Companies and the Ministry of Lands, Forestry and
Mines will procure a 80 MW power plant and will be operational by April
2007. Government is sourcing funds from the Chinese Government to
finance the Bui Dam Project.
62. It will add 400 MW to the generation capacity of the country and thus
increase the security of Ghana's power supply.
63. Mr. Speaker, we will also speed up the development of renewable
energy technologies particularly wind, solar and waste-power in 2007.
64. Mr. Speaker, energy efficiency and conservation is to be given a strong
emphasis through the procurement of more Compact Fluorescent Lamps
(CFLs) to replace 1 miliion incandescent bulbs with CFLs, as a first step,
by end 2007.
65. The momentum we have gained in the public education campaign on
energy use and conservation will also be maintained throughout 2007 and
beyond.
66. Mr. Speaker, Government absorption of the recent increases announced
by the Public Utility Regulatory Agency is only a temporal measure.
Government is still committed to full cost recovery in the Energy Sector.
REVIEW OF THE PAST YEAR
Global & Regional Developments
67. Mr. Speaker, two major global developments had the most impact on our
economy over the past twelve months.
68. Firstly, the price of crude oil rose substantially for much of the time,
topping $ 75 per barrel, amid dire forecasts of reaching the $100 per
barrel mark by the end of this year.
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69. Whilst prices have eased in recent times, continuing uncertainties in global
geopolitics and the persistence of rising demand for oil, point to prices
stabilising around the current levels of US$ 60 per barrel in 2007.
70. Mr. Speaker, secondly, the phenomenal growth of China's economy
continues to drive the global picture.
71. Mr. Speaker, China's importance to Africa's future economic prospects,
was reinforced by its recent hosting of the first Sino-Africa summit,
attended by 48 of the continent's 53 heads of States and Governments.
72. At the end of the encounter, China pledged a staggering US$3 billion to
assist Africa over the next three years.
73. Mr. Speaker, The China factor is expected to boost the economies of our
sub-region in the coming years.
74. Whilst the world economy is forecasted to grow by 4.7 percent in 2007,
Africa's growth has been targeted to grow by 5.9 percent in 2007 from the
4.8 percent level expected in 2006.
75. The projected resurgence of Africa's economy will come amidst a general
shrinkage in the volume of world trade, from 9.5 percent projected for
2006, to 7.5 percent for 2007.
76. Mr. Speaker, developments towards integrating the economies within the
West Africa sub-region have not been as encouraging as we should have
expected.
77. Although this year marked the 31st birthday of ECOWAS, the start date
for the introduction of a common currency for the West African Monetary
Zone, has had to be shifted again to December 2009.
78. However, it is hoped that the start of formal trading of ECOWAS
currencies in 2007 will give a much needed boost to the common currency
initiative.
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Highlights of 2006 Budget Performance
79. Mr. Speaker, before I get into the substance of what we propose for 2007,
I want to summarise the highlights of the performance of the Budget in
the first three quarters of 2006.
Macro-economy
80. Mr. Speaker, the economy has continued to be strong and robust over the
past year. We have stayed the course of prudent fiscal and monetary
discipline and remain on course to achieve the targets for the year.
81. Mr. Speaker the GDP trend over the last six years has increased from 3.7
percent in 2000, to 4.2 percent in 2001, 4.5 percent in 2002, 5.2 percent
in 2003, 5.8 percent in 2004 and 5.8 percent in 2005.
82. Mr. Speaker, we projected that our 2006 Gross Domestic Product (GDP)
would grow, in real terms, at a rate of 6.0 per cent. The third quarter
review of GDP performance indicates that we are broadly on course to
achieve and even surpass our target by the end of the year.
83. Mr. Speaker, I am pleased to announce that the GDP growth is expected
to reach 6.2 per cent by the end of the year.
Inflation
84. Mr. Speaker, the rate of inflation stood at 10.5 per cent last month. This is
slightly higher than the single digit level of 9.5 per cent achieved earlier in
the year and the target of 7 to 9 per cent for end 2006.
85. However, it is still a very commendable performance in view of the
pressures brought about by persistent high oil prices over the past year.
Interest Rates
86. Mr. Speaker, interest rates have continued to come down from their high
levels of 2000. At the end of September, the Bank of Ghana's prime rate
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stood at 14.5 per cent, a reduction from the 15.5 per cent at the
beginning of the year.
87. Government believes that there is more room for further reductions in
interest rates in the coming year.
Exchange rates
88. The exchange rate of the cedi against the benchmark US dollar has
remained fairly stable throughout the past year. The cedi to dollar
exchange rate which stood at ¢9,080 in November last year, is ¢9,211.8
as of 14 November 2006.
Debt relief
89. Mr. Speaker, We have begun to reap the benefits from the total
cancellation of our Multilateral Debts agreed during the G-8 Summit last
year.
90. In 2006, a total of $229.5 million was received to support our budget. We
are receiving $170.2 million in 2007 from MDRI.
Utilisation of HIPC Funds in 2007
91. Funds from the HIPC initiative for 2007 are estimated at ¢2,210.83 billion
and are, as in previous areas are targeted at the three priority areas of
the GPRS II.
92. Sectoral allocation is 60 per cent of the total amount.
93. Domestic debt payments, as usual, have been allocated 20 percent of the
total and contingency receives 5 percent.
94. National Youth Employment Programme has been allocated 5 percent of
the HIPC resources.
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95. District Assemblies have been allocated 10 percent of total HIPC funds
amounting to about ¢221.10 billion to support priority programmes for
human development at the local level. Of this amount, MPs have been
allocated ¢51.75 billion to spend on human development programmes
within their constituencies.
Sector Programmes - Outlook for 2007
Food and Agriculture
96. Mr. Speaker, MOFA will focus on the following policies and programmes:
• Promoting selective crop development
• Modernizing livestock development
• Improving access to mechanized agriculture
• Accelerating the provision of irrigation infrastructure
• Increasing access to extension services
• Enhancing access to credit and inputs for agriculture
97. Mr. Speaker, these policies will not only facilitate the MDG of reducing
hunger and poverty, but will also have a stabilising effect on the macroeconomic
environment in light of the fact that the food component is 52
per cent of the Consumer Price Index.
Cocoa Industry
98. Mr. Speaker, during the 2006/07 Crop Season, efforts will be made to
sustain production enhancement initiatives started a few years ago. In
the 2006/07 Crop Season, cocoa output is projected at 600,000 mt.
Producer Price
99. Mr. Speaker, the government will ensure that cocoa farmers continue to
receive remunerative producer prices, which will guarantee that the cocoa
farmer's share of net FOB is not below 70 per cent in any particular year.
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100. To this end, government announced a new Producer Price of ¢9,150,000
per metric tonne for the 2006/07 Main Crop season which opened on 13th
October, 2006.
101. The farmer's share of the net F.O.B is 72.19 per cent. The new price for a
bag of 64.0kg is now ¢571,875 as against ¢562,500 previously.
Tarring of Roads in Cocoa Growing Areas
102. Mr. Speaker, the government will embark on the tarring of selected routes
in the remote cocoa growing areas while solar lighting systems will be
provided in some of the villages. This is aimed at improving the standard
of living of farmers. The government through the Ghana Cocoa Board has
earmarked ¢450 billion for this programme.
Sheanut and Coffee Industries
103. In line with the government's aim of encouraging cash crop production,
Ghana Cocoa Board will soon meet with buyers and producers of sheanut
and coffee to agree on minimum producer prices so as to provide
incentives to the farmer.
104. This will serve as the basis for putting in place the required funding
arrangement for purchases of sheanut and coffee thereby increasing the
production of these commodities.
Ministry of Transportation
Ghana Highway Authority (Trunk Roads)
105. On the basis of the goals of the GPRS II and the expected attainment of
middle income status by 2015, the broad policy objectives of the
Transportation Sector from 2007 will focus on achieving the following
expected outcomes:
• Ensuring the provision, expansion and maintenance of road transport
infrastructure of all kinds.
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• Ensuring the provision of affordable, safe and accessible transportation
system that recognizes the needs of people and business enterprises
including farmers.
• Developing and strengthening the appropriate legal, institutional and
regulatory framework to regulate all modes of transportation to ensure
an efficient transportation system.
106. Mr. Speaker, the GHA will continue to undertake the following projects in
2007.
• Tetteh Quarshie - Madina
• Achimota - Ofankor
• Nsawam Bypass (Dualization)
• Anwiankwanta - Assin Praso (total rehabilitation)
• Bamboi - Tinga
• Asankragua - Enchi
• Pantang - Peduase
• Anyinam - Konongo Ph. II
• Sogakope - Ho
• Ho - Fume
• Wenchi - Sampa (KM 32 - KM 88)
• Kadjebi - Dzindzinso
• Akropong - Adankwame Ph. 1
• Kumasi - Barekese - Offinso
• Ashanti & B/A Roads (KfW Projects)
• Mallam - Kasoa & Interchange
107. The following new projects will be started in 2007
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• Berekum - Sampa
• Badu - Teinso
• Banda - Nkwanta-Bui
• Yendi - Bimbilla
• Wa - Lawra - Nandom - Hamile
• Fufulso - Sawla
• Menji - Banda Ahenkro to Bui
• Bonfa Junction - Bonfa - Asiwa - Bekwai (R87)
• Manso Nkwanta - Abore - Adumasa (R105)
• Techiman - Wenchi (Overlay)
• Sefwi Wiaso - Akontonbra
Department of Feeder Roads (DFR)
108. Mr. Speaker, major feeder roads improvement and upgrading works will
be carried out. Some of the major projects earmarked for execution are:
Greater Accra
1. Bortiano - Kokrobitey (5.35 km)
2. Ayi Mensa - Danfa - Amrahia (7.24 km)
Central Region
1. Abrem - Agona - Essiam Effutu Ph. 1 (15.2 km)
2. Afransi - Dawurampong Ph 2 (11.6 km)
Volta Region
1. Wedge - Alavanyo - Nkonya (16.2 km)
2. Abotiase - Atonkor (14.1 km)
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Eastern Region
1. Akropong-Atumfa - Ekosu (12km)
2. Oyeemso - Hweehwee Jn. (12 km)
Western Region
1. Anyinase Town Roads (5.7 km)
2. Asankragua Town Roads (4.81 km)
Ashanti Region
1. Asokore Mampong - Parkoso - Aperade (5.1 km)
2. Amatema Jn. - Wioso Ph. 2 (5.6 km)
Brong Ahafo
1. Badukrom - Tainso feeder road (11.0 km)
2. Abuatem Ph. 3 (6km)
3. Tanko - Fiema (7.4 km)
Northern Region
1. Karaga Town Roads (3.9 km)
2. Bunkrugu Town Roads (4.0km)
Upper West Region
1. Jirapa - Babile Ph. 2
2. Sombo - Daffiama (18 km)
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Upper East Region
1. Navrongo - Pungu (4.7 km)
2. Winkongo - Tongo - Zuarungu (16 km)
Department of Urban Roads (DUR)
109. Mr. Speaker, the Department will continue the following major
rehabilitation and reconstruction projects
• Construction of Nsawam Road (Kwame Nkrumah Circle-Achimota)
• Accra Central Business District Roads
• Kumasi Roads and Urban Development Projects
• Asafo Market Interchange
• Teshie Roads
• Awoshie-Pokuase
• Partial Reconstruction of Accra city roads
110. Mr. Speaker, this shows that no part of the country has been forgotten.
Interest Payments on Road Contracts
111. Mr. Speaker, the Ministry has observed with concern the existing
arrangements for paying interest on delayed payments of certified work
done by contractors. The existing clauses in the contracts within which
period claims attract interest range from 42 days to 90 days.
112. These irregular payment periods have severe cost implications on contract
management. The Ministry intends to review this existing arrangement by
standardizing the time frame for paying interests on all certified road
works.
Metro Mass Transit Limited (MMT)
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113. During the 2007 fiscal year, the Government will continue to assist MMT
to acquire more buses to enable them operate effectively in order to make
an impact in their areas of operation. This will enable the company to
increase its annual passenger lift to about 100 million passengers.
Water Resources, Works and Housing
Rural Water
114. Mr. Speaker, for Government to achieve the target of 58.5 per cent access
in 2007, the Ministry is to provide safe and potable water and especially
halt the rise in Guinea Worm cases in the country.
115. For example we plan to sink 2,399 boreholes and dig 1,589 hand-dug
wells.
Urban Water
116. Mr. Speaker, the Ministry will commence the following water projects in
the following areas: -
• Kumawu,
• Kwahu Ridge,
• Berekum,
• Assin Fosu,
• Sunyani and
• Techiman.
The rehabilitation of minor and low capacity treatment plants in various parts of
the country will also commence.
117. The Ministry will continue the execution of the following projects to ensure
the production and delivery of safe water to the people of Ghana: -
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• Tamale water supply expansion
• Koforidua water supply project
• Baifikrom water supply expansion project
• Kwanyaku water supply expansion project
• Accra East -West water transfer interconnection
• Kpong water supply expansion
• Cape coast water supply project
• Adenta water supply improvement project - Phase II works
• Sunyani water supply expansion project
• Wa water supply project
Education, Science and Sports
118. Mr. Speaker, 2007 marks the start of the formal implementation of the
educational reforms.
Basic Education
119. The drive towards the attainment of Universal Primary Completion by
2015 and Gender Parity by 2008 will be given additional impetus.
120. Although Government initiatives have led to a dramatic increase in
enrolment, public education on the need to send children to school will be
intensified in churches, mosques, durbars, market places, communities
and various fora.
121. Mr. Speaker, Government will continue to sustain and fine tune the
Capitation Grant Scheme to increase access to basic education.
Government will also continue to subsidise the examination fees of the
BECE.
122. The School Feeding Programme which was piloted last year will be
expanded to cover 92,000 pupils nationwide. It is expected that these
interventions will positively impact on enrolment in our schools.
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123. Consequently, the following enrolment targets have been set for these key
indicators for 2007:
Level of Education 2005/2006 2006/2007
GER (Pre-School Level) 75.2 78.5
GER (Primary Level) 92.1 95.0
Gender Parity Index (Primary Level) 0.95 0.97
124. Mr. Speaker, public recurrent expenditure on primary education will be
increased to at least 35 per cent of the total education recurrent
expenditure to enable the sector cover adequately the recurrent demands
from capitation grant scheme and other interventions.
Upgrading of Facilities in Teacher Training Colleges
125. In consonance with the role teacher education is expected to play under
the new education reforms especially in the teaching of science,
mathematics and technology, facilities in teacher training colleges are
being upgraded.
126. Construction of libraries, science laboratories and classrooms in all the 38
Teacher Training Colleges will be completed and furnished in the course of
the year.
Sports
127. Mr. Speaker, Government will continue to support sports development and
management in the country. Ghana is preparing fervently to host the
African Cup of Nations (CAN) Tournament in 2008.
128. In 2007, various preparatory activities, including work on construction of
Sekondi and Tamale stadia as well as the rehabilitation of the Ohene Djan
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Stadium, Accra El Wak Stadium, Accra and Baba Yara Stadium, Kumasi
will be completed. In addition, 20 community parks will also be upgraded.
Ministry of Health
129. Mr. Speaker, in 2007 the health sector will begin the implementation of
the new health policy focusing on achieving three inter-related and
mutually reinforcing objectives linked to the national economic
development and the MDGs:
i. Ensuring that children survive and grow to become healthy and
productive adults that reproduce without risk of injuries or death
ii. Reducing the excess risk and burden of morbidity, disability, and
mortality especially in the poor and marginalized groups
iii. Reducing inequalities in access to health, population and nutrition
services, and health outcomes
2007 BUDGET THRUSTS, TARGETS & APPROPRIATIONS
Targets for Key Economic Benchmarks
130. Mr. Speaker, Government has set the following targets for the key
economic benchmarks for the coming year.
Description 2007 2006
Nominal GDP ¢ 137.6 trillion ¢114.9 trillion
GDP Growth Rate 6.5% 6.2 per cent
Payments (Needs and Wants) ¢54.4 trillion ¢41.4 trillion
Revenue ¢ 37.5 trillion ¢25.4 trillion
Gap ¢ 16.9 trillion ¢16.0 trillion
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Grants ¢9.0 trillion ¢7.2 trillion
Loans ¢ 6.0 trillion ¢5.8 trillion
Divestiture ¢0.7 trillion ¢0
Exceptional Financing ¢1.2 trillion ¢0
Lotteries ¢0.1 trillion ¢0
Statutory Spending ¢14.8 trillion ¢13.0 trillion
Discretionary Spending ¢39.5 trillion ¢28.4 trillion
131. Mr. Speaker, Government proposes to appropriate the revenue raised to
support the following core expenditure centres, namely :
i. Statutory Payments is ¢14.8 trillion;
ii. Discretionary Payments is ¢39.6 trillion
• Personnel Emoluments - ¢13.2 trillion
• Administration - ¢3.1 trillion
• Service - ¢1.0 trillion
• Investments - ¢11.6 trillion
• MDRI and HIPC Financing - ¢3.4 trillion
• Others - ¢7.7 trillion
TOWARDS ECONOMIC INDEPENDENCE: POLICY INITIATIVES
132. Mr. Speaker, over the last 6 years, we have built a strong political, social
and economic foundation from which we are now ready as a nation to
launch a new and intensified thrust for accelerated growth.
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133. As we shift into a new development paradigm, numerous challenges will
confront us. This year's policy initiatives are geared towards confronting
these challenges.
134. Mr. Speaker, the focus of this year's policy initiatives is to promote home
ownership, diversify our sources of funding, to enhance revenue, tax relief
and incentives and continue to improve the business environment.
Improving the Business Environment
135. Mr. Speaker, Ghana has made great progress in improving our business
environment.
136. Our aggregate rank in the 2007 World Bank Doing Business Report was
94th compared to last year's rank of 102nd out of 175 countries.
137. In addition, Ghana was rated among the top 10 reformers on the ease of
doing business despite the fact some of the scores reflected a
misinterpretation of local requirements.
138. For example, while the report adds the procurement of a corporate seal
and environmental permit as requirements for starting business in Ghana,
thus adding 61 days for starting a business, in reality, corporate seals are
not required and environmental permits are only required for a limited list
of businesses.
139. Mr. Speaker, the process of improving the business environment must be
a never-ending one. We must continually measure how well we are doing
and whether the objectives of reform programmes are being met.
140. To further improve the business environment, the following measures are
being proposed:
i. Development of a national index that tracks the costs and burdens of
doing business
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ii. Improving the process of reform itself by opening up the process of
design and implementation to more stakeholders in order to obtain
useful inputs and to build consensus and ownership
iii. Strengthening the implementation of the Financial Administration Act,
2003, Internal Audit Act, 2003 and Public Procurement Act, 2003 in to
the furtherance of transparency and accountability in the delivery of
government services and reduction of corruption.
141. Mr. Speaker, the government has for some time now been developing a
Regulatory Impact Assessment tool to ensure that the costs and benefits
of new policies and regulations are fully analyzed and balanced, in order
to avoid unintended consequences on the business environment.
142. In 2007, the Regulatory Impact Assessment tool will be formalized and
implemented.
Capital Market Development
143. Mr. Speaker, our capital market development policies are showing results.
More and more investors are showing their confidence in us by opting for
medium-term instruments.
144. Building on the success of the medium-term instruments, the government
proposes to issue a 5-year bond early in 2007.
145. The bond will be a major benchmark issue to be listed on the Ghana Stock
Exchange.
Private Finance Initiatives (PFI)
146. Mr. Speaker, private finance initiatives are increasingly emerging as a cost
effective approach for public authorities to procure the services of the
private sector to design, finance, build, and operate public facilities thus
enabling the government to limit its initial outlays.
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147. In line with our belief in the private sector, the Government will from the
2007 fiscal year promote the use of Private Finance Initiatives (PFI) to
stimulate private investment in public sector projects.
148. In this regard Government will identify projects to be implemented with
PFIs. Amongst the projects to be pursued are schools, residential and
office buildings.
149. To facilitate the achievement of this novel idea, MOFEP in cooperation
with the private sector will develop a framework for Private Finance
Initiatives to assist MDAs to apply the Model.
150. Mr. Speaker, in 2007, government will be inviting the private sector as PFI
partners in the following key initiatives:
i. The construction of a state-of-the-art-Training Centre for all the
security agencies and funding of Government involvement in the
U.N. Peacekeeping Programs for the Defence and Police Service.
ii. As a way of generating income, Government will also partner with
the private sector to construct state-of-the-art health facilities across
the country, including the construction of a dedicated orthopaedic
hospital.
The facilities will be utilized by the international community including
those in the sub-region as referral points.
iii. A centralised Revenue Training College for all revenue agencies will
be established to provide training programmes to aid in improving
the skills of the staff of the Revenue Agencies
Promotion of an Independent Investment Authority
151. Mr. Speaker, the catalytic role of government has been instrumental in
many countries in bringing the private sector to invest in major
infrastructure projects.
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152. Government therefore proposes to create an independent investment
authority called Ghana Investment Corporation (GIC).
153. GIC will partner with the private sector in the financing of infrastructure
projects that will have economic returns. Some potential projects will
include energy, roads, railways and water.
154. Mr. Speaker, GIC will also be a vehicle for us to optimise our gains in the
world market by getting our fair share of the value created in the
processing of our raw materials into finished products.
155. Consequently, GIC will be given the mandate to make other investments
that create new sources of wealth for Ghana.
156. In particular GIC will be tasked to explore the possibility of investing and
acquiring shares in international and multi-national companies that
purchase our raw materials such as cocoa and gold and process into
finished products.
157. These investments will enable us to hedge against falling commodity
prices by benefiting from the dividends and capital appreciation of multinational
companies who use our raw materials.
Involving Ghanaians in Development Finance: The Golden Jubilee
Bond
158. Mr. Speaker, the celebration of Ghana's Golden Jubilee next year will be
an occasion for Ghanaians to come together as one people with one
destiny with a shared interest in our country.
159. On this memorable occasion, the government wishes to create an
opportunity for all Ghanaians to share in the pride of the development
drive which is being ushered in by the proposals in this Budget.
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160. In fulfilment of this, Government will, in 2007, launch the Ghana Jubilee
Bond, to provide a vehicle for all Ghanaians, including those in the
Diaspora to be part of Ghana's development.
161. The proposed bond is targeted to raise the cedi equivalent of $25 million
for a landmark infrastructure project.
162. The Golden Jubilee Bond will be a retail bond sold to individuals
throughout 2007 with all financial institutions invited to participate in the
distribution. The terms of the offer will be announced in due course.
International Financial Services Centre
163. Mr. Speaker, in 2006, government initiated preparatory work for the
establishment of an International Financial Services Centre (IFSC) in
Ghana.
164. The centre will enable Ghana to provide specialised financial services for
offshore customers in the areas of banking, insurance, securities, leasing
and other non-bank financial services.
165. The IFSC will be a realisation of Ghana's vision of a financial sector that is
efficient in the mobilisation of funds, fully integrated with the global
financial system and supported by a regulatory system that promotes a
high degree of confidence as articulated in the Financial Sector Strategic
Plan.
166. In 2007 government will continue with the implementation of the banking
component and initiate the preparatory work for the non-banking
component with the view to having a full-fledged IFSC in place by March
2008.
Expanding Banking Services and Reducing Interest Rates
167. Mr. Speaker, the banking system in Ghana serves only a small proportion
of the population.
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168. Only 10 per cent of the bankable population has bank accounts, leaving
some 90 per cent operating outside the formal banking sector.
169. To deepen the financial system, Bank of Ghana, in collaboration with the
banks, is spearheading the introduction of a National Payments System
(NPS) to ensure delivery of financial services to all segments (banked and
unbanked) of the population under a common payment system
framework.
170. Mr. Speaker, to promote fair and competitive interest rates, the Bank of
Ghana has directed all bank and non-bank financial institutions from
January 1, 2007 to publish the Annual Percentage Rate (APR) of interest
applicable to their loans, including loan processing and administration
fees.
171. This will allow prospective borrowers to obtain a more accurate
comparison of true cost of borrowing and therefore make a more
informed choice.
172. In addition, the Bank of Ghana will publish on a regular basis, the various
main bank charges of all the banks to provide customers and potential
customers with regular information about the cost of particular financial
services.
173. For example, some banks charge ad valorem fees for some services while
others have specific fees. Likewise some banks do not charge for
Automated Teller Machine (ATM) services while others do. Customers will
be able to make informed choices and this should enhance competition in
the banking system.
Freeing Up "Dead Capital"
174. Mr. Speaker, for several years, government has implemented measures to
improve access to credit.
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175. These measures include various microfinance schemes such as MASLOC
and other lending programmes delivered through the banking system, the
abolition of secondary reserves for banks, house numbering and street
names and the current initiative to implement a National Identification
System.
176. Mr. Speaker, unfortunately our investment in building this credit
infrastructure has not produced a material impact on the availability of
credit to Ghanaians.
177. As a result, our economy has been unable to make the transition from a
cash-based economy to a credit-based economy, which is a necessary
condition for accelerated economic growth.
178. Mr. Speaker, government believes that a key constraint in the credit
delivery chain is the inability of Ghanaians to offer their properties as
collateral because of lack of proper legal title.
179. As a result of this unfortunate situation, the vast majority of properties in
Ghana have, in the words of the famous economist, Hernando de Soto,
become "dead capital".
180. Consequently, government has decided to task the Attorney-General and
the Ministry of Lands and Forestry to explore alternative approaches to
property titling that would free up this dead capital to support a creditbased
economy.
Global Services Delivery
181. Mr. Speaker, in today's global village, trade relationships between
countries have expanded to include services that in the past were not
considered tradable.
182. Developments in other countries indicate that a wide range of services are
exportable. These include the export of expertise in key service areas such
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as peacekeeping services, health, sports, banking, accounting, legal and
information technology services.
183. Ghana should take advantage of these opportunities to increase the
contribution of the services sector to our balance of payments and GDP.
PUBLIC PROCUREMENT
184. Mr. Speaker, the objective of the Public Procurement Act, 2003 is to
among other things reduce the cost of government procurement and
ensure value for money and transparency, thus reducing the incidence of
corruption.
185. As a further measure to reduce the cost of government operations, the
government has decided to explore the possibility of developing
framework agreements with suppliers of common items by pooling the
procurement of public institutions in order to obtain better prices through
economies of scale in purchase volumes and competitive bidding.
REVENUE ENHANCEMENT, TAX RELIEFS AND INCENTIVE
MEASURES,
186. Mr. Speaker, the government is determined to promote the practice of
efficient taxation and enhance confidence in the tax system.
187. In addition government is committed to introducing measures that seek to
remove the bottlenecks that impede revenue generation and collection.
188. Accordingly, the government proposes the following measures and
initiatives:
Land Administration Amnesty and Registration Fees
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189. Mr. Speaker, the Ministry of Lands, Forestry and Mines, as part of its
policy to encourage land registration and investment proposes the
following tax amnesty programme:
i. That Government, through the Lands Commission as administrator of
state lands, will waive any interest on arrears of rent owed
government by lessees of government land should make good their
indebtedness up to 2007 without interest.
ii. The Amnesty starts on January 1, 2007 and ends in December 31,
2007.
iii. Secondly, to encourage title registration, fees on land registration will
no longer be based on land value as currently pertains since stamp
duty under the Stamp Act is also based on land value. Rather, fees will
be based on flat rates irrespective of land value as follows:
• Up to 1 acre ¢350,000
• 1 acre to 100 acres ¢500,000
• Above 100 acres ¢10,000 for each additional acre
• Mortgages ¢350,000
• Discharge ¢100,000
Levy on Timber Exports
190. Mr. Speaker, for sometime now, there has been controversy regarding
the collection of a 3 per cent export levy on timber by the Forestry
Commission and its alleged adverse impact on the fortunes of the timber
industry.
191. In 2007 the Ministry of Lands, Forestry and Mines together with industrial
representatives will review the fiscal and financial framework of the
Commission in particular and the forestry sector in general in order to
effect the necessary legislative amendments to address the concerns of
stakeholders decisively.
192. In the meantime the collection of the 3 per cent levy will continue.
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Excise Duties
193. Mr. Speaker, during 2007, a comprehensive Bill will be prepared to
rationalize excise taxes.
194. The general objective of the rationalization will be to convert the excise
tax on alcoholic drinks (beer, stout, branded spirits and wines), malt
drinks, carbonated soft drinks, and cigarettes and other tobacco products
from the current structure to a specific -rate structure.
195. The general effect of this change will be a reduction in the excise taxes on
beer and stout and carbonated soft drinks.
196. To reduce the incidence of smuggling, the excise tax on cigarettes and
other tobacco products will also be reduced. However, excise taxes on
spirits will be increased.
197. Details of these changes will be worked out for implementation by end
March, 2007.
National Reconstruction Levy
198. Mr. Speaker, I am pleased to announce that the National Reconstruction
Levy will from January 1, 2007 no longer exist.
Review of Exemption on Imports
199. Mr. Speaker, to reverse the trend and rationalize the use of exemptions to
effectively service productive areas of the economy, government intends
to review the exemption regime as a whole to reduce the scope and to
eliminate abuses in the administration and application of the facility.
Broadening the Income Tax Base
200. Mr. Speaker, during 2007, DVLA and IRS will develop and implement a
system that will link assessment of taxes with vehicle registration.
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201. This measure will not only enhance revenue collection but will also bring a
fairer distribution of the tax burden which currently is primarily borne by
those employed in the formal sector.
Tax Reliefs
202. In line with the government's objective of increasing disposable incomes
of taxpayers and to encourage tax compliance, the following tax reliefs
are being proposed:
Type of Relief Current Amount Per
Annum
Proposed Amount Per
Annum
Marriage/Personal ¢300,000 ¢350,000
Old Age ¢300,000 ¢350,000
Children's Education/Child ¢240,000 ¢300,000
Aged Dependent ¢200,000 ¢250,000
Cost of Training ¢200,000 ¢1,000,000
Establishment of Tax Arbitration Board (TAB)
203. Mr. Speaker, to enhance transparency in tax administration and expedite
the resolution of appeals, government is proposing the establishment of a
Tax Arbitration Board.
204. The TAB will decide on appeals against the decisions of the Revenue
Commissioners. The Revenue Agencies Governing Board (RAGB) will
facilitate the setting-up of the Tax Arbitration Board.
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TAX INCENTIVES
205. Mr. Speaker, despite the above measures to rationalize and enhance
revenue collection, government continues to look for opportunities to
provide tax incentives to the private sector in key sectors of the economy.
Venture Capital
206. Mr. Speaker, Government is pleased to announce an enhancement of the
Venture Capital Tax incentives announced in the 2006 budget as follows:
i. The 5-Year full exemption from corporate income tax, dividend tax and
capital gains tax for eligible venture capital finance companies is now
extended to 10 years.
ii. The 100 per cent chargeable income deduction granted to financial
institutions investing in venture capital finance companies is now
expanded to include all corporate and individual investors who invest
in venture capital financing companies.
iii. Distributions of interest, dividends and capital gains to investors in
venture capital finance companies shall be tax exempt.
iv. Losses from disposal of the shares of a venture investment may be
carried forward for a period of up to 5 years after disposal.
Final Withholding Tax (WHT)
207. Mr. Speaker, final Withholding Taxes (WHT) have remained at their 2004
level in spite of the reduction in general corporate tax rate.
208. It is proposed that final withholding taxes be reduced proportionally to
reflect the reduction in general corporate tax rate as follows:
i. WHT on Dividends from 10% to 8%
ii. WHT on Management and Technical Services from 20% to 15%
iii. WHT rate on Rent from 10% to 8%
Capital Gains
209. Mr. Speaker, to encourage the public to register changes in ownership of
properties, the capital gains tax is reduced from 10 per cent to 5 per cent.
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VAT Clearance Certificate
210. To facilitate the efforts of the VAT Service at ensuring full compliance and
also consistent with international best practices, it has been decided that
VAT Clearance Certificate (VCCs) will be issued to VAT registered
businesses in good standing on application from the first quarter of 2007.
211. These certificates will have a validity period of 6 months, and will be used
for example, as passes by businesses in activities such as competitive
tendering and the clearing of goods at the port.
Computers for Schools
212. Mr. Speaker, to further enhance the usage of computers in schools,
Ministry of Education, Science and Sports will be funded to take
advantage of the new technology for the production of low cost
computers designed specifically for basic education.
213. The Ministry of Communication in collaboration with the Ministry of
Education, Science and Sports will oversee this initiative.
Intensifying R & D
214. Mr. Speaker, Government needs to support basic and applied research in
order to generate new pillars of growth for the economy.
215. For the purposes of encouraging basic research, government will promote
the establishment of an Endowment Fund for Science and Technology
Research by providing an initial allocation of ¢5.0 billion.
216. The private sector and other institutions will be encouraged to contribute
to this Endowment Fund to create a regular flow of resources for basic
research. The CSIR will coordinate this initiative.
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217. Mr. Speaker, the government encourages the private sector to take
advantage of the generous tax incentives already in the Internal Revenue
Act to step up their commercialization of research outcomes.
INCENTIVES FOR LOCAL MANUFACTURERS
Raw materials for pharmaceutical products
218. Mr. Speaker, government has already granted exemptions to 66 active
pharmaceutical ingredients.
219. To further encourage local pharmaceutical industries to increase the
supply of locally produced drugs and support the current National Health
Insurance Scheme, it is proposed that VAT and import duties on raw
materials and packaging materials used in manufacturing drugs for
treatment of HIV/AIDS, Tuberculosis and Malaria be removed.
220. The Food and Drugs Board will be mandated to ensure that the
concession is not abused by drug companies.
221. Mr. Speaker, to ensure the sustained development and competitiveness of
the pharmaceutical manufacturing sector and to guarantee that locally
produced products are completely free from VAT, it is also proposed that
all relevant pharmaceutical products be zero-rated.
222. This will ensure that locally produced pharmaceuticals compete on the
same basis with their imported substitutes.
223. The pharmaceutical industry is therefore invited to take advantage of
Government's support and improve its local production capacity with the
intention of entering the lucrative international markets, starting with the
West Africa sub-region.
5% Concessionary Import Duty Rate on Raw Materials Imported
by Registered Manufacturers
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224. Currently there are manufacturers whose raw materials are admitted at
concessionary import duty rate of 10 per cent, same as import duty
charged on corresponding finished products.
225. To make such manufacturers competitive, it is proposed to admit the raw
materials that fall under this category at 5 per cent.
Promotion of Locally Produced Rice and Poultry
226. Mr. Speaker, Government recognises the need for guaranteed market for
local rice and poultry products. In this direction, Government will actively
promote the use of locally produced rice and poultry products by all public
institutions like schools, hospitals and the security agencies.
227. This programme will be coordinated by MoFA. The Rice Growers'
Association and Poultry Farmers' Association will work closely with the
ministry to ensure its effective implementation.
District Industries Programme
228. A major highlight of the 2007 Budget is the implementation of the District
Industries Programme (DIP).
229. Under this programme, each of the 138 districts will be assisted with
funding to create an enabling environment and play a catalytic role in the
creation of district industries by partnering with the private sector
investors.
230. The Ministry of Trade, Industry, Private Sector Development and PSI will
provide technical advice to the MMDAs, while the Ministry of Local
Government, Rural Development and Environment will coordinate the
programme.
231. An amount of ¢138 billion from HIPC funds is allocated for this initiative.
The programme will, however, be directly implemented by the MMDAS.
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Promotion of Home Ownership
232. Mr Speaker, to increase access to housing for public sector employees, the
Government has made available funds to HFC Bank to provide mortgage
loans at favourable rates to public sector employees.
233. Initially, this facility will be made available to employees in the Judiciary,
Medical Services, Ghana Education Service, the Civil Service, the military,
police and other security agencies.
234. The scheme will be expanded eventually to cover the wider public sector.
The Ministry of Water Resources, Works and Housing and MOFEP will
facilitate this process with HFC Bank.
Rationalisation of Utilities
235. Mr. Speaker, there is a high misuse or wastage through consumption of
utility services by employees from within government organisations.
236. Mr. Speaker, our desire to rationalise the consumption of utility services,
especially in public institutions remains a high priority.
237. As a first step towards the control of energy consumption by Government
agencies, government proposes that all public buildings (MDAs, MMDAs
and government houses etc) are fitted with pre-paid electricity meters.
238. Mr. Speaker, to cut down cost in the use of telephone facilities in
governmental organizations, MOFEP on a pilot basis, will install a call
accounting and least cost routing system.
239. This system is able to track and monitor the use of telephones. It is
expected that the system will be replicated in all public institutions to
effectively monitor, control and manage the use of telecommunication
resources in all governmental organizations.
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240. Mr. Speaker, a similar monitoring and tracking system will be designed for
the use of water in public institutions.
Expanding Coverage of the National Health Insurance Scheme
241. Mr. Speaker, the Ministry with its collaborative agencies will sustain the
National Health Insurance Scheme and expand its coverage nationwide to
about 55% of the population.
242. Mr. Speaker, the National Health Insurance Council proposes the creation
of fixed registration points to enable individuals register at their
convenience and return to the same points for their cards after processing
and issuance.
243. Towards this end, the Council will work with the Ghana Post, Ghana
Commercial Bank, Association of Rural Banks, hospitals, health centres
and clinics on the possibility of establishing at the registration point at the
premises of their branches and agencies.
244. To facilitate the exercise, National Service personnel have been recruited
for training and deployment to the various registration points to assist
with the registration.
Introduction of Annual Renewal of Vehicle Registrations
245. Mr. Speaker, in Ghana, vehicles are given permanent registration status at
the time of initial registration at the Driver and Vehicle Licensing Agency
(VELD).
246. This regime is contrary to international best practice and is fraught with
numerous risks.
247. There is no mechanism for identifying licence plates that have been made
redundant as a result of the vehicles being scrapped or abandoned. Many
of these redundant licence plates are used on stolen, un-customed or
unregistered vehicles.
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248. This situation creates a major difficulty in law enforcement and
apprehension of criminals.
249. In addition, the statistics of vehicles existing and in circulation in the
country are inaccurate and frustrate government's planning efforts in the
transport sector.
250. Mr. Speaker, in light of the above issues, Government is proposing that
motor vehicles and trailers undergo annual renewal of registration.
Government also proposes to introduce a new numbering system to
differentiate motor bicycles from motor vehicles.
251. In course of 2007, we will introduce amendments to the Road Traffic
Regulations in order to achieve these objectives.
c
DIVERSIFYING OUR SOURCES OF FINANCING
252. Mr. Speaker, Ghana has had a long and fruitful relationship with the IMF.
The Fund has supported the economic programs of Ghana with annual
disbursements in 20 of the last 23 years.
253. The latest Poverty Reduction Growth Facility (PRGF) Program expired on
October 31, 2006. Our disciplined management of the economy and the
use of IMF resources has resulted in unprecedented economic stability
and economic performance that has positioned the country for accelerated
growth.
254. Mr. Speaker, we are happy to announce today that with the completion of
the latest arrangement on October 31, 2006, Government has decided to
exit the Poverty Reduction and Growth Facility and the use of the Fund's
financial resources while continuing to pursue our development agenda in
line with our aspirations.
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255. We are fully appreciative of the tremendous support we have received
from the IMF in the past and we will continue to meet our Fund
obligations as an active member.
256. More importantly, Mr. Speaker, we intend to take advantage of the Fund's
Policy Support Instrument.
257. While Ghana will no longer need Fund financial support, the Policy
Support Instrument will enable us to seek ongoing IMF advice and
endorsement of our economic policies in order to provide positive signals
to our development partners and the global economy.
258. Mr. Speaker, while reliance on donor-provided grants and concessional
loans has served us well, there is , however, the need to expand the
scope and structure of financing if government is to meet its goal of
scaling up investments for accelerated growth from the current 6 per cent
to 8 per cent annually.
259. After achieving stable macroeconomic conditions and winning the
confidence of markets as reflected in our B+ sovereign rating, the
Government intends to enter the international capital markets in 2007.
260. In addition Government will seek more funding by requesting access to
the non-concessionary loan window of the World Bank and ADB.
261. Mr. Speaker, the government sees this as a major turning point in the
economic history of Ghana, and will be approaching it with all the
necessary precautions to make it a success.
262. Secondly, the size of borrowing will be well within our debt sustainability
levels.
263. In this regard, the government will establish a high-powered project
evaluation unit to assess and monitor projects benefiting from these
resources to ensure that they can be justified in terms of economic
returns.
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Implementation Challenges
Maintaining Micro-Economic Stability
264. The primary challenge that we face as we implement this budget is the
management of the process of transition from "Stability" to "Growth with
Stability".
265. This transition becomes more challenging in the face of:
• high expectations from the labour front for enhanced wages;
• unpredictability of fuel prices and supply constraints in electricity; and
• the concurrent demand for improved and reliable utility services.
Entering the Capital Market
266. Mr. Speaker, as we celebrate 50 years of independence, we cannot ignore
the high population growth rate in the nation, coupled with rural urban
migration and the concomitant high population density in urban and periurban
areas throughout the country.
267. This has put a tremendous pressure on the utility services infrastructure
and requires increased investment in the provision of services such as
electricity, water and sewerage.
268. Pursuing this course at the time that Ghana has just completed the HIPC
and MDRI programme raises a concern, of relapse into a state where we
cannot sustain our debts dubbed "moral hazard" by our Development
Partners.
269. Consequently, Ghana will need to speed up the establishment of the
Ghana Investment Corporation which is to see to the encouragement of
the private sector to participate jointly with Government to invest in selffinancing
projects.
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270. Mr. Speaker, Government will be transparent in the identification and
design of these projects through full disclosure of information throughout
the processes.
271. Government will welcome constructive contributions from all Ghanaians
and our Development Partners in the selection and analysis of these
projects.
272. The relationship through the "Policy Support Instrument" with IMF should
provide the confidence to the investor community and our Development
Partners that Government will prudently manage its debt sustainability
profile to ensure macro stability whiles pursuing its much needed
infrastructure drive, in a sequenced manner.
Meeting Revenue Targets
273. Mr. Speaker, another challenge is the ability of the Revenue Agencies to
increase the domestic revenue collection to meet our revenue targets.
274. Mr. Speaker, operators in the formal and informal sectors should develop
the discipline to be good corporate citizens by paying the right taxes.
Low Absorption Capacity
275. Mr. Speaker, the 2006 Budget Statement identified low absorptive
capacity of the public service which has resulted in the slower than
expected utilisation of available project funds.
276. To improve our absorptive capacity requires that disciplinary action be
meted out to officers who do not perform.
Conclusion
277. Mr. Speaker, I would like to conclude by thanking all persons of diverse
backgrounds, organisations and our media for their inputs to the 2007
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Budget Preparation process and for assisting in monitoring the 2006
Budget Statement.
278. Mr. Speaker, I will urge everyone to read the accompanying documents to
this Budget Speech:
i. The 2007 Budget Statement and Economic Policy of Ghana;
ii. Action on 2006 Budget Statement: Policy Initiatives and
Implementation Challenges;
iii. Ahead of our Times;
iv. Beyond the Budgets: 1982 - 2000 and 2001 - 2005
• Policies on Wages, Energy and Employment;
v. District Economy.
279. Mr. Speaker, next year offers us a unique opportunity to accentuate the
things that unite us as Ghanaians.
280. Government has planned the events of the coming year to rekindle hope,
restore the confidence that inspired us to inspire others, and above all to
recognise that the success of our country's leadership comes from the
strength of the bond that holds Ghana together.
281. Mr. Speaker, the Government, through the Fair Wages Commission and
the Technical Team on Wages will address the Living Wage Policy and
New Public Sector Pay Structure.
282. The Government will address the country's power problem centrally and
with full commitment and resolve to put funds into getting our electricity
supply system fully revamped.
283. Mr. Speaker, all the funds for MDRI for 2007 have been voted for the
Energy Sector.
284. Mr. Speaker, the sacrifices that we have all made in the last six years
constitute the foundations on which we can confidently:
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i. build our Private Sector;
ii. develop our Human Resources; and
iii. sustain the culture of Good Governance and Civil Responsibility.
285. As we continue to maintain this collective vision, we can all strive to
deepen decentralisation and democracy, remain committed to distribute
the wealth of this country equitably, then strive unceasingly to replace
POVERTY with PROSPERITY by 2015.
286. Our vision as a country remains NOBLE.
287. Mr. Speaker, we have brought to bear the weight of our thoughts and
passion on the development of our country. We are walking on the path
of honour and courage.
288. However, the challenges ahead of us require that each one of us puts in
our maximum effort, so that together we can build a strong, united,
prosperous and happy nation which will continue to draw its strength and
guidance from the Almighty God or Allah.
289. Mr. Speaker, I beg to move.
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