Accra, Feb. 24, GNA - Provisional estimates of the balance of payments (BOP) in 2004 indicated that economic transactions with the rest of the world posted a deficit of US$123.4 million compared to the surplus of US$558.3 million in the year 2003.

This outturn was attributed to a surge in import values over the period, thereby enlarging the deficit on the merchandise trade account to US$1,425.4 million from $670.4 million recorded in 2003.

Presenting the 2005 Budget to Parliament on Thursday, the Minister of Finance and Economic Planning said in spite of this outturn, substantial inflows of inward remittances and exceptional financing enabled the build-up of reserves to US$1,732.0 million at the end of the year, enough to cover 3.8 months of imports of goods and services, against the background of the rising level of imports.

He said the current balance on Current Account registered a deficit of $151.3 million in 2004 year compared with a surplus of $302.3 million in the previous year 2003.

"This development in the current account position was largely due to the worsening of the merchandise trade account by more than double from a deficit of $670.4 million in 2003 to a deficit of $1,425.4 million in 2004."

Mr Baah-Wiredu said earnings from the export of processed cocoa products were estimated at $86.7 million, that is, from 44,459 tonnes at an average price of $1,950 per tonne in 2004, against earnings of $126.1 million in 2003 from 48,536 tonnes exported at an average price of $2,598 per tonne in 2003.

He said Ghana's major exports other than cocoa performed very sluggishly in value terms in the markets.

Gold exports remained flat in value terms on account of a decline in production, as output fell by about 200000 fine ounces. However a 12 percent gain in prices pushed export earnings to $838.7 million, slightly above the $830.1 million earned from exports of the metal in 2003.

Apart from the export of timber products that accounted for over $211.7 million in 2004, all other exports, by commodity type are lagging in their contribution to export earnings.

Growing reliance on oil, as a result of strong global growth, pushed oil prices up in 2004.

As a consequence, the total oil import went up by 38.0 percent to $775 million. Consumption of crude oil increased by only 1.0 percent in volume terms, while average realised prices surged by 32 percent in the period. Crude oil imports accounted for 70.0 percent of the total oil bill while finished products took up the rest.

The Minster said the provisional inflow of direct investment financing as estimated by Ghana Investment Promotion Centre (GIPC) went up by 27 percent 2004. Investment flows (excluding divestiture) amounted to $139.3 million, compared with $110.0 million in 2003.

Ghana's Gross International Reserves (GIR) recorded in 2004 amounted to $1732 million, an increase of $306 million over the level recorded in 2003.

However, expressed in terms of import cover, the GIR was adequate to cover 3.8 months of imports of goods and services at the end of December 2004, compared with 3.9 months in 2003. The fall in the coverage rate of imports is a result of the sharp rise in the value of imports projected for 2005.