The Governor of the Bank of Ghana on Friday on said the economy has performed well over the last year but cautioned that the government needs to sustain its macroeconomic policies with emphasis on consolidating efforts on fiscal and monetary policy.

Dr Acquah told journalists after the first meeting the Monetary Policy Committee (MPC) set up by the central bank to monitor interest rates that the government budget added some impetus to the economy.

"Revenue growth was robust and on target, but the pace of government expenditure was more rapid. Considerable amounts of arrears accumulated over the past years and that remained in the system were cleared." Inflation slumped from a high of 41.9 per cent in March 2002 to 12.9 per cent last September but this has inched up to 13.2 per cent in October.

He said government borrowing increased to 4.7 per cent of Gross Domestic Product - 2,247 billion cedis - in mid November.

The borrowing was financed on the domestic money market in the form of treasury bills, he said, adding that the increase was "significant" as it goes to hold money which otherwise should go to finance private sector operations.

Government borrowing from the Bank, he said, was almost close to the statutory 10 per cent ceiling under the Bank of Ghana Act.

Reserve money growth as at October was 19.3 per cent, slightly above the end year target of 19.0 per cent with broad money growth on the other hand at 18.4 per cent in September.

"On a year-on-year basis, broad money growth was 43.0 per cent in September, and was driven by an increase in foreign currency deposits as well as time and savings deposits in the banking system," he added.

Dr Acquah said private inward remittances at the end of September through the banks and finance companies amounted to 540.06 million dollars. This is higher than the estimated 400 million dollars in 2001.

Cumulative total foreign exchange purchases during the year through to the end of October was 744.30 million dollars, compared to the total sales of 724 million dollars over the same period.

This represents a 30 per cent increase over the same period last year. The increase in private remittances and bank purchases and sales of foreign exchange means that there has been an increase availability of foreign exchange in the economy this year.