The Minister of Finance today laid before parliament his budget proposals for 2002. It was a marathon presentation and at one point, the Minister was almost choking and the Speaker of Parliament had to allow him a brief break to catch his breath.

The highly detailed document, as was expected, reflected very much the pointers given in the President's Sessional Address.

The Minister reserved the heart of his presentation to his closing paragraphs when he announced that Ghana would reach decision point in the Highly Indebted Poor Countries (HIPC) Initiative today, Friday, February 22, 2002. Parliament erupted in one huge cacophony when this announcement was made.

The HIPC Initiative has been received with mixed feelings since the Kufuor Administration accepted it last year. To be HIPC has gone into the lexicon of Ghanaian usage as the symbol of penury.

The Minister said Government of Ghana is expected to save an additional 100 million dollars from debt service payments from the Initiative.

The money would be geared towards domestic debt and poverty reduction spending plan. Mr Osafo-Maafo said the additional relief would boost government's efforts to raise cash to support and reduce the incidence of poverty and promote growth.

He said government would continue to ensure that Ghana got the full benefits under the HIPC initiative.

It will be recalled that when British Prime Minister Tony Blair paid his historic visit to Ghana in early February he told Parliament that he expected the HIPC decision point for Ghana to be made soon. Where HIPC is concerned, Ghana is said to have come very far quite early after accepting it only a year ago.

The first reactions from some leading members of the government and opposition, as expected have been canceling out each other.

"The Budget adheres to the President's priorities," Dr. Nduom, Minister of Economic Planning and Regional Integration declared as soon as the Minister of Finance concluded his reading of the Budget aloud to Parliament.

"He focuses on infrastructure, and investments in production," both of which will "provide more jobs." Dr. Nduom expressed faith that the areas of production most directly affected are the very poorest sectors of Ghanaian society, thus "creating important growth patterns."

Kwabena Adusa Okerchire, MP, (NPP Nkawkaw) said the government made a most essential shift towards democracy by allocating "43% more financial aid to the police than the armed forces, i.e. military," thus pushing to maintain the "good governance" that a democracy needs first and foremost. "Law enforcement along with increased cocoa prices and relief from debt, what more could you ask for to boost an economy?"

Moses Asaga, former Deputy Minister of Finance however begs for much more. Firstly, "there are no new development policies," he claimed. The proposed 4-5% growth rate in agriculture and industry is "not sufficient." The GDP must grow at a "rate of 7-8% if the per capita is to increase at all." In addition, he predicts the decision to go HIPC will simply "deter foreign investors," putting Ghana out of competition with South Africa and Nigeria. "No one wants to invest in a nation pleading for help...and the monetary relief is uncertain to rid us of our debt."

John Mahama, MP (NDC Bole), Former Minister for Communications, elaborated, "though we may have debt relief on one hand, we are borrowing money on the other hand...debt has gone up by 6.2%." Mr. Mahama was just as skeptical about the timing of going HIPC as he was of the timing of increasing the Producer Price of Cocoa. "It is the end of the season, how much cocoa can farmers even sell at this new price? Cote d'Ivoire has had similarly high prices for years."

No one from the NDC could however contest the government's effort to improve infrastructure, but many wondered "how exactly will this create jobs if there is no mention of vocational training in the budget?"

Despite the speculations of the NDC, the "frankness" and "honesty" of the budget are indisputable. The numbers speak positively about the future, and there is certainly now "meat" on the spine of the President's Sessional Address, which put forth a "new forward agenda of national development and growth" with this year's budget. Many "bold initiatives" have been taken; many points of contention can be expected to ensue.

The Minister of Finance said the budget, which was the first full year implementation of the President's economic and social development agenda is on the theme: "Towards Stability and Growth."

Mr Osafo-Maafo said the 2002 budgetary allocations to various sectors were guided by the key areas spelt out by the President in his State of the Nation Address.

These are infrastructure development, agriculture and rural development, enhanced social services with emphasis on education and health and good governance.

He said the macroeconomic targets for this year are a real GDP growth of at least 4.5 per cent, a reduction in the rate of inflation from 21 per cent at the end of 2001 to 13 per cent by the end of 2002.

Other targets are an overall budget deficit equivalent to 6.9 per cent of GDP, a domestic primary budget surplus of 4.2 per cent of GDP and rebuilding

of the gross official reserve holdings to the equivalent of 2.6 months of imports of goods and services.

Mr Osafo-Maafo said government would consult with oil companies and other stakeholders with a view to encouraging competition in crude oil purchases.

There would also be explicit subsidies to utility companies to reduce their expected losses.

The parliamentary debates over the budget are scheduled for next Tuesday. Just as the Sessional Address attracted impassioned debates, Osafo Maafo's first consolidated budget can expect a rough ride from the opposition NDC.