THE Monetary Policy Committee (MPC) says the immediate outlook of the economy has improved. The chairman of the committee, Dr Paul Acquah, told a press conference in Accra yesterday that three major factors, global uncertainty about the war in Iraq, increase in foreign inflows and rise in cocoa and gold prices, have combined to create the optimistic posture.

Dr Acquah explained that the global economic uncertainty associated with the war in Iraq which was pervasive during the first quarter has been lifted.

Additionally, he said, the current pace of foreign exchange inflows from the private sector and the prospects of higher programme-related disbursements from the international financial institutions and donors will bolster the external position.

Again, after softening in the first quarter, cocoa and gold prices have gone up since April and stressed that these situations have improved the immediate outlook of the economy with an expected decline in international crude oil price, he said.

Dr Acquah said the current inflation outcome for April, which stood at 30 per cent, indicates that the economy has absorbed the inflation jump associated with petroleum price increases in January this year.

He said that given the balance of risks on the economic front and the emerging disinflation process, the committee has decided to leave the prime rate unchanged at 27.5 per cent.

The chairman of the committee said the April rise of 1.5 per cent in the consumer price index is the lowest increase so far this year, adding that the monthly change in non-food price inflation which was 0.7 per cent was also the lowest in the sub-sector over the last seven months.

He said a single digit inflation is expected to be achieved by March next year. Giving the performance of the economy at the end of the first quarter of the year, the Chairman of the MPC said the fiscal outturn showed increased domestic revenue mobilisation and lower than programmed expenditure.

Dr Acquah said total revenue of the first quarter amounted to ?2.7 trillion, exceeding the budget target by about ?90 billion.

Total expenditure, on the other hand, was contained below the budgeted target with domestic primary balance surplus of ?190.8 billion for the quarter, compared to a budgeted deficit target of ?421 billion, Dr Acquah said.

“Consequently, net domestic financing of the budget amounted to ?369 billion which was significantly less than the budget target of ?823 billion”, he said.

The government, he said, improved its financial position with the banking system to the tune of ?551 billion by the first half and stressed however that the domestic public debt stock rose by 3.9 per cent in the first quarter of they year compared to an increase of 8.5 per cent in same period last year.

On the external sector indicators, Dr Acquah said earnings from cocoa and minerals repatriated through the central bank were $58.2 million and $73.1 million respectively which were above projected levels. Payments for oil imports, he said, amounted to $167.6 million which was lower than the projected level.

The MPC chairman said volume of foreign exchange inflows in the form of private inward remittances from companies, NGOs, embassies, churches and individuals, among others, amounted to $540 million, representing 70 per cent increase over the amount recorded the same period last year.

Dr Acquah said there is a slowdown in the growth of the monetary aggregates due to a 17 per cent decline in reserve money during the first quarter of the year.

He said sample survey results on business sector activity suggests generally positive economic expectations.

O n the performance of the Ghana Stock Exchange (GSE) during the first quarter, Dr Acquah said the GSE All-Share-Index rose to 18 per cent as compared to 6.5 per cent during the same period last year.

On equity trading, turnover volume was 43 million shares, up from 7 million shares during the same period last year. Total value of shares traded during the period under review also increased from ?24.7 billion in 2002 to 224 billion in 2003.