Ghana budget sees 7 pct growth in 2008
by Guardian Unlimited
Ghana's economy will grow by at least 7 percent in 2008 after growth this year was slowed by heavy rains which washed away crops, and high fuel prices which hampered industry, the finance minister said on Thursday.
Economic growth in 2007 in the world's second-biggest cocoa producer is seen at 6.3 percent, 0.2 percentage points below the original target.
Finance Minister Kwadwo Baah-Wiredu, presenting the 2008 budget to parliament, forecast an overall deficit of 4.0 percent of GDP next year. Ghana's total external debt stood at $2.637 billion, or 17.6 percent of GDP, by end September 2007.
"Government's priorities for the 2008 budget will focus on facilitating growth and reducing poverty through major infrastructural development," Baah-Wiredu said.
The main areas of investment would be roads, water and energy in an effort to integrate the rural economy better. Tax incentives would also be introduced to encourage banks to provide more credit to the farming sector.
The government planned to issue a 10-year domestic bond in 2008 for the first time as part of a strategy to develop the long-term segment of the domestic capital market, Baah-Wiredu said.
It also planned to establish a stabilisation fund to insulate the economy from external shocks, in particular the unpredictability of earnings from its main exports, including cocoa, gold and timber.
COCOA, OIL AND FOOTBALL
Ghana's economy, blessed with thriving cocoa and gold production and a stable political climate, has been one of the better-performing in West Africa in recent years.
Baah-Wiredu said Ghana expected to produce more than 600,000 tonnes of cocoa in the 2007/08 crop year, following a strong start to the season. The crop reached a record 740,457 tonnes in 2005/06 and was above 600,000 tonnes in 2006/07.
Ghana's leaders are hoping the discovery in June of up to 600 million barrels of oil at an offshore block owned by London-based Tullow Oil Plc and Texas-based Anadarko Petroleum Corp. will provide a further boon.
"With the country poised for accelerated growth, a massive infusion of capital is required to undertake the necessary infrastructure to facilitate such growth," Baah-Wiredu said.
"The discovery of oil in commercial quantities could therefore not have come at a more opportune time."
Baah-Wiredu said the government had made good progress in maintaining economic stability but that major challenges would continue to include unpredictable energy prices and supplies, public sector reform and maintaining debt sustainability.
He said the government would strive to ensure that the organisation of presidential and parliamentary elections next year, as well as Ghana's hosting of the African Cup of Nations (CAN) soccer tournament, would not lead to a budgetary over-run.
"Three out of the four stadia have already been completed; the remaining one is expected to be completed by the end of this month," he said. "With the hosting of the CAN 2008 ... we anticipate a high degree of vibrancy in the tourism industry." (Writing by Nick Tattersall; Editing by Daniel Flynn and Ron Askew)