Accra, Nov. 4, GNA- The Minister of Finance of Economic Planning, Mr Yaw Osafo-Maafo on Tuesday outlined the government's outlook for the rest of 2003 and requested for supplementary appropriation to ensure the economic growth of the country.
He said the revised macroeconomic framework retains the assumption that the real Gross Domestic Product (GDP) will now grow by 4.7 per cent in 2003.
Mr Osafo-Maafo said this on Tuesday when he moved a Motion for the Review of the Economic Performance of the Government for the 2003 and laid a paper for supplementary Estimates for the 2003 Financial Year. The Minister said as to the outlook for inflation, "forward-looking surveys indicate that inflation expectations are shifting downwards, however there continues to be downside risks inherent in world oil prices and exchange rate re-alignments of the major international currencies".
He said the economic outlook over the short and medium term will continue to be driven by sustained implementation of the fiscal and monetary framework and a continuation of structural reforms to bolster productivity and output growth.
Mr Osafo-Maafo said to achieve the inflation objectives the Bank of Ghana intends to keep the pace of monetary expansion within the original budget targets.
This implies bringing the 12-month growth rate of broad money (excluding foreign currency deposits) down from 44 per cent at end of June 2003 to 25 per cent by end of 2003.
He said fiscal revenue in 2003 is expected to be higher than originally programmed in the 2003 budget and the prospect of achieving the objective of a zero net domestic financing of the budget is very bright.
Mr Osafo-Maafo said the Ministry is seeking supplementary appropriation with regard to its revised expenditure plans based on the total payments which is 909.2 billion cedis representing 4.3 per cent of the original appropriation approved by Parliament in March 2003.
He said out of this amount, statutory payments are 350.0 billion cedis while discretionary payments amount to 559.2 billion cedis.
The Minister said domestic interest payments are projected to be higher than in the original budget by 221.2 billion cedis as a result of the Government of Ghana Index-Linked Bonds (GGILBS) and the Tema Oil Refinery (TOR) bonds that are inflation-linked.
External interest payments are also projected to be higher by 8.9 billion cedis.
He said payments into the Ghana Education Trust Fund (GET Fund) are now being made with a one-month lag rather than a one-quarter lag in compliance with the GET Fund Act.
With this development and the projected VAT collections for 2003, an additional 267 billion cedis is expected to be transferred to the GET Fund in 2003.
The District Assemblies Common Fund (DACF) is also expected to go up by 11.4 billion cedis, in line with the expected increase in total tax revenue.
He said the revised nominal wage target for 2003 is expected to reach 5,576 billion cedis up from 5,450 billion in the 2003 budget showing a supplementary requirement of 126.0 billion cedis.
Expenditures on Administration and service are also expected to be higher than the estimates in the original budget to ensure funding of the Ghana Poverty Reduction Strategy (GPRS).
Mr Osafo-Maafo said in addition to new requests from some Ministries, Departments and Agencies which cannot be ignored, higher costs of operation and maintenance as well as their additional utility bills require that expenditure on Administration and service will go up by 175.5 billion cedis.
The Minister said domestic-financed expenditures on capital projects are also projected to increase by 32.5 billion cedis to ensure funding of the GPRS priorities.
Mr Osafo-Maafo said the delayed adjustment of utility tariffs in August and September will require an additional 90 billion cedis in budget subsidies to the Volta River Authority (VRA), Electricity Company of Ghana (ECG) and the Ghana Water Company (GWC) Limited for the rest of 2003.
He said HIPC-financed expenditure is projected to go up by 103.2 billion cedis, reflecting receipts from HIPC debt relief, which is expected to be higher by about 129 billion cedis.
The Minister said based on a verification of domestic payments arrears outstanding at end of 2002, the government now expects to clear more arrears in 2003 than planned at the time of the budget. Mr Osafo-Maafo said the revenue outlook remains robust and improved underlying tax revenue performance is expected to broadly outweigh lower receipts from new revenue measures that were outlined in the 2003 budget.
In additional to the domestic revenue mobilisation effort, programme loans and grants for budgetary support from development partners are expected to be higher than originally programmed in the budget.
He said with the high outturn of receipts so far, additional domestic revenue totalling 354 billion would be generated without the imposition of new taxes while supplementary receipts from external sources in the form of grants are projected at 314.2 billion cedis.
The Minister said with the robustness of the tax revenues and receipts in general, the supplementary expenditures could be contained without putting the overall fiscal regime at risk by maintaining the underlying fiscal objective of zero net domestic financing of the budget.
Mr Osafo-Maafo said he is, therefore, not seeking any additional taxes to finance the supplementary expenditures.