The Hon. Minister for Finance And Economic Planning, Mr. Yaw Osafo-Maafo today presented The 2004 Budget Statement And Economic Policy Of Government to Parliament in Accra under the theme: Releasing Energies Of Individuals And Businesses Towards Sustainable Growth
INTRODUCTION:

• Creating a more friendly environment to support business
• Tax reliefs to individuals and businesses
• Strengthening and streamlining existing revenue mobilization strategies to maintain robust revenue collection
• Reduction of import duties and removal of VAT on selected inputs

• President’s priorities cornerstone for transformation of society viz:
  - Infrastructure development
  - Modernisation of Agriculture based on Rural Development
  - Delivery of enhanced Social Services
  - Strengthening of institutions of Good Governance
  - Strengthening the Private Sector
  OVERVIEW OF PERFORMANCE IN 2003
  Developments in the West African Monetary Zone (WAMZ)
  
  • Met 3 out of 4 convergence criteria, the best in the WAMZ countries
  • Location of the Headquarters of West African Central Bank in Accra
  
  
  OVERVIEW OF PERFORMANCE IN 2003
  
  
  • Real GDP growth of 5.2 percent as against target of 4.7 percent over performing the medium term target of 4.9%
  • Decline in year-on-year inflation to 23.6 percent end December, 2003 after peak of 30 percent in April, 2003
  • Depreciation of only 4.7 percent of cedi against the US dollar
  • Overall Budget deficit of 3.4 percent of GDP marginally above the budget target of 3.3 percent of GDP
  • Net Domestic financing registered a repayment of 0.4 percent of GDP against target of zero
  • Healthy levels of foreign exchange reserves – covers 3.9 months of imports
  • Robust and sustained tax revenue growth:
    
    
    - ?4.4 trillion in 2000 (16.3% of GDP)
    - ?6.6 trillion in 2001 (17.2% of GDP)
    - ?8.5 trillion in 2002 (17.5% of GDP)
    - ?13.4 trillion in 2003 (20.5% of GDP)
    
    
  • Ghana Stock Exchange (GSE) All – Share Index appreciated by 154.7% (142.7% in dollar terms) – best ever
  • Sharp fall in 91-day Treasury Bill Rate from a peak of 35.3% in June, 2003 to 18.3% end of year
  • Growth in Exports:
    - US$1,867.1 million in 2001
    - US$2,015.2 million in 2002
    - US$2,297.2 million in 2003
    
    
  • District Assemblies Common Fund (DACF) and GETFUND – current on transfers into the DACF & GETFUND
  • Ghana’s Sovereign Credit Rating
    B+ rating by Standard and Poors
    B with a positive outlook rating by Fitch Ratings
    
    SIGNIFICANT DEVELOPMENTAL ACTIVITIES IN 2003
    
    Infrastructure
    
    
    • Rehabilitation of sections of Accra Kumasi road.
      
      
    • Commencement of works on Mallam Kasoa and Kasoa-Winneba road sections of Accra – Yamoransa road
      
      
    • Study progress on Tema-Sogakope section of Accra-Aflao road
      
      
    • Work on Tettey-Quarshie interchange about 50 percent complete
      
      
    • Commencement of work on Kwame Nkrumah – Achimota road, Tema Hospital-Ashaiman road including interchange
      
      
    • Inchaban-Sekondi road
      
      
    • 1,130 new boreholes fitted with hand pumps completed in the rural areas
    
    
    Modernized Agriculture
    
    
    • Ayensu Starch Factory started production in 2003 and exported first consignment of 240 tonnes in September, 2003.
    • 30,305 hectares of forest plantation establish in 2003 creating 95,000 jobs.
    
    
    Cocoa Sector
    
    
  • Producer Price increased to 9 million at the beginning of 2003/2004 Main Crop Season
    
    
  • Price almost a 3 fold increase over that paid in the 2000/2001 Main Crop Season
    
    
  • Bonus payment of ?154.6 billion
    
    
  • Off-shore loan syndication of US$650 million for cocoa purchases in the 2003/2004 Crop year
    
    
  • 496,793 metric tones of cocoa produced second highest in the country’s history
    
    
  • ?253 billion spent on control of capsid and black pod covering an area of 1.6 million hectares
  
  
  Enhanced Social Services
  
  
  • 685 3-unit classroom each with toilet facilities, teachers common room, store and library built across the country
    
    
  • Primary gross enrolment ration improved from 79.5 percent to 81.1 percent
    
    
  • Funding provided for implementation of 120 District Mutual Health Insurance Scheme in 90 districts
    
    
  • Implemented a programme for the prevention of mother-to-child transmission of HIV in 19 sites
    
    
  • Provided Anti-Retro-Viral Therapy to AIDS patents at 4 hospitals.
    
    
  • Skill training for 10,000 youth
  
  
  Good Governance
  
  
  • 1,200 new personnel recruited for Ghana Police Service
    
    Utilisation of HIPC Funds
    
    
  • Disbursements amounted to ?850.79 billion by the end of the year
  
  
  Macroeconomic Objectives for 2004
  
  
  • A real GDP growth of at least 5.2 percent
    
    
  • Single digit inflation
    
    
  • Foreign exchange reserves cover of not less than 3 months;
    
    
  • A domestic primary surplus of 2.3 percent of GDP; and
    
    
  • A budget deficit of 1.2 percent of GDP
  
  
  Significant Developmental Activities for 2004
  
  
  • Start of work on Ofankor-Nsawam and Kumasi-Fumesua sections of Accra-Kumasi Road
    
    
  • Continuation of work on sections of Accra-Yamoransa road
    
    
  • Begin work on Sogakope-Akatsi sections of the Accra-Aflao road
  • Continuation of Government’s regional road programme
  • Upgrading of a number of roads to bituminous surfacing
  • Commencement of works on Central Business District roads including reconstruction of the High street in Accra
    
    
  • Development of Asafo Market interchange in Kumasi
  • Continuation of the Tamale arterial roads
    
    
  • The metro Mass Transit Company will take delivery of 100 DAF/Neoplan buses from Holland
    
    
  • Construction of 2000 new boreholes fitted with hand pumps
    
    
  • Completion of Buipe-Bolgatanga petroleum products pipe line projects
  • Provision of 20 ground water irrigation equipment
  • Completion of 100 factory units under garments and textiles imitative
  • Start of work on 25 schools under second phase of Model Senior Secondary Schools Programme.
  • Continuation of first phase involving 31 schools
  • Distribution of 365 saloon cars, 500 motor cycles and 1000 bicycles for health professionals under hire purchase scheme
  • Completion of 15 health centres and rehabilitation of 7 health facilities.
  • Rehabilitation of Maternity and medical blocks at the Korle-Bu Teaching Hospital
  • Construction of 5 blocks of flats and 12 block of flats for Doctors at Komfo Anokye and Korle-Bu respectively.
  • Expansion of 11 nursing training schools
  
  
  
  
  POLICY INITATIVES FOR 2004
  
  
  
  Tax Relief Measures
  
  
  • Increase in the minimum tax free threshold from ?1.2 million to ?1.5 million
    
    
  • Widening of the income tax bands
    
    
  • Reduction in corporate income tax rate from 32.5 percent to 30 percent effective next financial year.
    
    
  • Special tax rate of 25 percent for companies listing on Stock Exchange for the first time
    
    
  • 5-year tax holiday for new agro-processing firms
    
    
  • Revised taxes for agro-processing as follows:
    :::Accra and Tema - 20 percent
    :::Other Regional Capitals - 10 percent
    :::Outside Regional Capitals - zero
    
    
    
  • For 3 Northern Regions zero tax rates for
    
    
  
  
  Agro-processing firms irrespective of location
  
  
  
  
• 7-year tax holiday for waste processing enterprises
  
  
• reduction in vehicle income tax for articulated trucks from ?1.2 million to ? 900,000
  
  Reduction of Import Duties and Removal of VAT on Selected Imported Imputs
  
  • reduction in import duty on aluminium ingots from 10 percent to 5 percent
  • Zero rating of imported industrial raw materials
  • Removal of duties on imported lumber
  • Removal of VAT on irrigation pumps
  • Removal of duty and VAT on imported inputs for fishing nets and fishing ropes
  • Removal of taxes on musical instruments
  • Removal of GCNet processing fees on currency importation
  
  Other Measures
  
  • DVLA to be connected to GCNet system to facilitate registration of imported vehicles
  • Government to derive appropriate returns on investments in commercially oriented public institutions
  • Rationalization of interest payments in Government contracts
  • Sale of low cost houses to occupiers
  • Floatation of new shares on Ghana Stock Exchange
  • Tender for new management contract for the bank
  • Floatation of new shares in GCB on the Ghana Stock Exchange and encourage Ghanaians to acquire shares.
  • Consumer protection through enforcement of health and safety standards
  
  Value Addition to Cocoa Industry
  
  • Government to support commercial production of cocoa industrial by-products developed by Crop Research Institute of Ghana – animal feed, fertilizer, soap, pomade and alcoholic beverages
  • 5-year tax holiday for companies investing in production of cocoa industrial by-products
  • allocation of ?25 billion to support the establishment of such industries
  
  Other Support Measures
  
  • Government has voted an amount of ?18 billion for the purchase of new varieties of pineapple suckers.
  • Government to support the development of a regulated warehouse receipt system
  
  Financial Sector Reforms
  
  • Establishment of Long-term Savings Plan
  • Introduction of other financial bills to accelerate the process of financial deepening – the Foreign Exchange Bill, Credit Union Bill, Insurance Bills and Cheques Bill
  • Government to recapitalise Exim-Guaranty Company Limited
  • Establishment of National Micro Finance Administration to coordinate and administer micro finance programmes