Accra, Nov. 15, GNA - Finance Minister Kwadwo Baah-Wiredu, said on Thursday that the economy had responded well to government's policies of economic and financial stabilization, leading to significantly reduced inflation, rising output growth, improved external account balances and rising foreign exchange reserves.

Presenting the 2008 Budget to Parliament on Thursday, Mr Baah-Wiredu said

GDP growth had risen steadily from 3.7 per cent in 2000 to an estimated 6.3 per cent in 2007, averaging 5.5 per cent over the last five years. Consumer price inflation declined from 14.8 at end December 2005 to 10.5 per cent as at end December 2006.

Mr Baah-Wiredu said the external position was relatively strong, with rapid growth in exports and imports, and gross international reserves standing at

US$2.0 billion at the end of 2006, covering about 3.4 months of projected imports of goods and services. The cedi also remained relatively stable against all the major international currencies. Mr Baah-Wiredu said monetary policy in 2006 remained focused on reducing inflation to low and stable levels.

Broad money supply, including foreign currency deposits (M2+), increased from 14.3 per cent in 2005 to 38.8 per cent in 2006. This development was underpinned by strong growth in savings and time deposits (47.5 per cent) and demand deposits (43.7 per cent) during the period.

Also, interest rates on the money market continued to respond to the easing of the prime rate during the year.

He said the exchange rate of the cedi had been relatively stable against the major international currencies.

"The external payment position has proved resilient to external shocks, particularly the high oil prices. The domestic public debt to GDP ratio (net) has been cut from about 24 per cent in 2002 to about 12 per cent in 2007.

The current account position (including official transfers) moved from a deficit of 6.1 per cent of GDP in 2001 to a deficit of $812.67 million, equivalent to 6.5 per cent of GDP in 2006.

Gross international reserves have improved from US$233.4 million (0.8 months of imports of goods and services) in 2000 to US$2,266.7 million (equivalent to 3 months of imports of goods and services) in 2006.