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High expectations? Finance Minister presents mid-year review budget today

Mr Seth Terkper says government's confidence in the economy is boosted by the resumption of aid from development partners

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  play Seth Terkper, Minister of Finance and Economic Planning

The government will, today, July 21, 2015, announce major progress made in the implementation of the 2015 budget in the first five months in its mid-year review to be delivered to Parliament.

This will be the first major policy statement since visible signs of progress began to emerge in the economy, which is boosted by a confidence review by the International Monetary Fund (IMF).

The Finance Minister, Mr Seth Terkper, told the Daily Graphic in an interview that the review would give an update on the implementation of the 2015 budget in the first half of the year.

The government's confidence is boosted by the resumption of aid from development partners.

Mr Terkper explained that the review would look at the 2014 budget and the first five months of the 2015 budget estimates, given the fall in global crude oil prices which could have a negative impact on the current account balance and foreign exchange reserves.

Ghana, which produces gold, cocoa and oil, is in talks with the IMF on an assistance package designed to stabilise the economy, amid high inflation and a wide budget deficit.

"The required adjustments (to the budget estimates) will be done through the necessary procedures to ensure that the continued fall in crude oil prices does not derail our fiscal consolidation objectives," Mr Terkper had earlier told journalists.

The government based its 2015 budget, announced in November last year, on a crude price of $99.736 per barrel, a figure derived using a formula based on legislation.

Oil is currently trading below $60 a barrel.

Ghana began producing oil in 2010 and has a Stabilisation Fund to protect the economy against price shocks.

The economy grew around eight per cent in recent years due to exports, but GDP growth is expected to slow in 2015 to 3.9 per cent, due in part to fiscal problems and a currency that slumped 31 per cent last year.

But analysts think the review is coming at a time when the cedi has, over the last two weeks, made significant gains against the major currencies.

The interbank rate of the cedi to the dollar last Friday was GH¢3.2343 for buying and GH¢3.2377 for selling.

Although the cedi has made gains, inflation was still high at 17.1 per cent as of the end of June, while interest rates are about 35 per cent.

According to the analysts, the budget review must take into account growing unemployment among graduates of tertiary institutions, the freeze on public sector employment, as well as the high cost of living.

Nonetheless, Mr Terkper has, at various fora, given assurances that the measures adopted by the government, especially the home-grown policies, are achieving results.

At the Graphic Business/Fidelity Bank Forum on July 2, 2015, he had said the adoption of home-grown policies had proved helpful.

“When Ghana adopted the home-grown policies to withstand the external shocks, it was able to migrate all public servants onto a uniform salary scale through the Single Spine Salary Structure (SSSS),” he said.

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