A Senior Research Fellow of the Centre for Policy Analysis (CEPA),Dr Samuel Nii Ashong, has called on the government to absorb the debt of Tema Oil Refinery (TOR) to ensure that TOR operates on a clean sheet.

This, he said, will ensure that the inefficiencies and the debt build-up at TOR will not be passed on to the proposed National Petroleum Board when the government decides to move away from the automatic price regime.

Dr Ashong made this known at a Finance Seminar on the 2003 Budget Statement which was organised by the Databank Financial Services in Accra on Tuesday. The Senior Research Fellow was giving an assessment of the 2003 budget statement.

On inflation, he said the government target of achieving a 9-per cent inflation by the end of the year is very ambitious.

He explained that considering the petrol price increases, increases in utility prices and tightening of the monetary growth from 50 to 25 per cent, cost will escalate, leading to higher inflationary rates in the economy. Additionally, he said if government projections of inflows of donor funds fall short of the anticipated inflows it will force government to borrow from the domestic market, a situation, which he said has been the normal occurrence. He explained that it can lead to inflationary tendencies.

“Government must take a cue from what happened in the 2000 financial year to ensure that we do not go back to those problems this year,” Dr Ashong said. He called on the government to review the 0.7 per cent of divestiture proceeds to finance budget shortfalls, stressing that “this is a mistake and the government has to take a second look.”

On government expenditure, the Senior Research Fellow said that Heavily Indebted Poor Countries (HIPC) unspent balance of ?469 billion has obscured government expenditure and may be understating government borrowing from the domestic market.

Dr Ashong said the overall government budget policy is modest and stressed that “it is the first policy direction that has made conscious effort at linking the Ghana Poverty Reduction Strategy to government expenditure.” He said the economic growth target of 4.7 per cent is consciously projected as there is no need to over-project figures that are unachievable.

The executive Chairman of Databank, Mr Ken Ofori-Atta, speaking on the topic, Private Sector Aspirations- A cue for Policy Makers, said the establishment of the proposed venture capital as announced in the budget is a welcome news to the private sector.

He said the budget was not bold enough as the target growth of 4.7 per cent is very modest, considering government’s aim of making the country a middle income one by 2015, and added that the challenge, however, is how to restrain government’s borrowing.

He called for the reduction in corporate tax and suggested a further diversification of traditional exports in the country.