2009 BUDGET (2)

Cocoa exports rose from US$975.7 million in 2007 to US$1,239.65 million in 2008, up by 66.9 per cent or US$262.0 million.
This was mainly on account of increases in both volumes exported and realised export prices. The volume of cocoa beans exported increased by 4.2 per cent to 568,820 tonnes. Average prices realised from exports of beans increased by 21.9 per cent to US$2,179.34 per tonne in 2008.
Gold exports were equally strong in 2008. Export earnings increased by 29.6 per cent from US$1,733.78 million in 2007 to US$2,246.25 million in 2008. The growth in value was due to the combined effects of price and volume as average realised prices went up by 25.8 per cent and the volume of exports increased by 4.06 per cent.
The value of exports of timber products also improved considerably to about US$309.0 million, from the US$249.0 million recorded in 2007. While average prices increased by 17.64 per cent to US$554.09 million per cubic metre, the volume went up to 557,663 cubic metres, an increase of 5.5 per cent.

Import Performance
Total import bill for 2008 rose by 27.2 per cent from US$8,066.11 million in 2007 to US$10,260.97 million. This was mainly boosted by a significant growth of 32.5 per cent in non- oil imports.

Oil Imports
Total oil imports for the period under review is provisionally estimated at US$2,349.22 million up by 12.1 per cent compared with US$2,095.00 million in 2007. The bill for petroleum products in 2007 was mainly due to increased consumption of oil products following the electricity load shedding that the country experienced during most part of 2007. The 2008 bill on the other hand, was mainly accounted for by the increase in oil prices on the world market, which reached a high of US$147 per barrel in July 2008.

Non-oil imports
There was considerable rise of 32.5 per cent in non-oil imports from US$5,971.11 in 2007 to US$7,911.75 in 2008. This was mainly due to increased consumption and continued investment activity within the economy. Imports of capital goods, intermediate goods and consumption goods grew by 34.3, 35.86 and 19.96 per cent, respectively.
The increase in capital goods was reflected in the growth of capital goods, except transport equipment and industrial transport equipment, while the increase in intermediate goods was mainly on account of growth in food and beverages, primarily for industry, parts and accessories of capital goods, primary industrial supplies, parts and accessories of transport equipment; and foods and beverages processed for industries.
The growth in consumption goods was underpinned by increases, mostly in food and beverages primarily meant for consumption, non-durable consumer goods and semi-durable consumer goods. However, growth in durable consumer goods, was marginal. Other goods increased by 54.54 per cent to US$769.3 million due to an increase in importation of passenger cars which grew from US$443.12 million to US$756.24 million, up by 70.65 per cent.
Services, Current Transfers
and Income Account
The surplus on the services, current transfers and income account in 2008 amounted to US$1,512.17 million, a much lower figure than the US$1,742.5 million recorded in 2007. Services and investment income recorded more outflows in 2008 compared to 2007 due to higher freight and insurance charges associated with the higher import growth. Private transfers increased from US$1,833.8 million to US$1,921.92 million while official transfers increased from US$209.4 million to US$241.11 million.
With the deterioration in the balance of trade more than offsetting the surplus on the services, income and current transfers account, the current account recorded a deficit of US$3,473.47 million, equivalent to 20.87 per cent of the GDP.

The Capital and Financial Account
The balance on the capital and financial account recorded a surplus of US$2,666.05 million, a marginal increase over the 2007 surplus of US$2,591.42 million.

Private Capital Flows
Net private capital inflows during the year were estimated to have increased by US$1,150.36 million to US$2,211.84 million. The main contributing factor to the increase in the account was a major improvement in divestiture receipts, mainly from the sale of Ghana Telecom, and a significant upward shift in direct investment, which was estimated at US$1,220.41 million, compared with an inflow of US$855.38 million for 2007.

Official Capital Flows
Net official capital inflows declined significantly by US$645.61 million from US$1,168.64 million to US$523.03 million in 2008 mainly on account of Government°os drawdown on the balance of the sovereign bond.
In spite of the above developments, the balance on the financial and capital account was less than enough to finance the deficit on the current account, resulting in as overall balance of payments deficit of US$940.7 million, equivalent to 6.1 per cent of GDP. In the corresponding period of 2007, the overall balance of payments recorded a surplus of US$413.1 million, equivalent to 2.8 per cent of GDP.

International Reserves
Gross international reserves also fell by US$800.4 million from a stock of US$2,836.7 million at the end of 2007 to US$2,036.2 million, mainly as a result of a drawn down in foreign bond proceeds to finance planned capital investments. The gross international reserves as at end 2008 translates into a cover for 1.8 months of imports for goods and services.

SECTION FIVE: MACROECONOMIC FRAMEWORK

Medium-Term Framework
The NDC Vision
The vision of the NDC Government is to adopt carefully designed policies and programmes that will stimulate and develop the immense talents and resourcefulness of Ghanaians and make them the main drivers and beneficiaries of the national development agenda, with special emphasis on the rural and urban poor.
In pursuit of this vision, the government will:
• make macro-economic stability an important goal;
• provide the policy and programme framework for enterprises to re-tool, adopt modern technologies, access capital, and
• overcome historical and structural constraints that impede competitiveness;
• forge a partnership between the government and the business sector, to enhance and promote national economic growth;
• devise and implement an urgent national action plan for the modernisation of agriculture at the production, harvesting and marketing levels. These will include rationalising access to agricultural lands; making strategic investments to reduce the risks inherent in agriculture (irrigation and agro-processing); and expanding availability of agriculture-related infrastructure; and
• apply fair and equitable social distribution mechanisms that enhance the welfare of all citizens, especially the weak and the vulnerable in society.

Economic Objectives
Against the backdrop of the current economic situation, our main strategic policy objectives are outlined below.
The broad policy objective of the NDC government is to lead this economy into middle income status that registers in the lives, livelihoods and incomes of ordinary people by the year 2020. We plan to accomplish this objective through the adoption of prudent policy measures, better policy coordination, and better management of the national economy.

Growth
Growth will be pursued through proper coordination of related policy areas such as:
• improving and sustaining macroeconomic stability;
• resource mobilisation to support accelerated economic development
• expanded development of production infrastructure in, among others, energy, transport, water and communications;
• creating employment, through support for micro small and medium enterprises of various categories;
• modernising agriculture and the rural economy;
• resuscitating manufacturing activities;
• developing the complement of human capital critical for managing the various aspects of national development; and
• promoting Regional Integration.

Fiscal Policy
The NDC Government believes in funding development and the provision of essential services through efficient, effective, and equitable taxation of all citizens. We will seek to improve tax revenue collections by introducing reforms in tax administration, and enhancing tax incentives.
Government will reform the National Revenue Authority to ensure integrated tax administration. This will, among others, facilitate the sharing of information among the revenue agencies to achieve more accurate assessments, widen the tax net and avoid duplication of efforts.
The administrative reforms will include adequate and reliable funding of the revenue agencies, a comprehensive computerisation of the direct and indirect tax systems, human resource capacity building, increased tax awareness and publicity programmes to enhance tax consciousness, to increase tax mobilisation from the informal sector.
Tax policy will be used to encourage people to work hard by creating adequate incentives for work and increased productivity, in order to increase disposable incomes of individuals.
In the medium term, emphasis will be placed on prudent expenditure management with the view to reducing
unproductive expenditures to the barest minimum.

Monetary Policy
163.
Monetary policy will support fiscal policy, focusing on sharply reducing inflationary pressures and stabilising price and exchange rate expectations on the market. The Bank of Ghana (BoG) will direct monetary policy towards reducing the end period inflation, and strengthen its inflation targeting framework.
164.
The flexible exchange rate regime will be maintained and foreign exchange interventions will only be used as an
instrument to smooth out volatility in the foreign exchange market.
165.
Measures will be introduced to encourage further development of the market for bonds and other long-term securities, mobilize savings for investment and restructure the financial system to enhance the flow of credit to the productive sectors.

Medium-term Macroeconomic Targets
166.
In line with the medium term policies, the following are the main macroeconomic targets:
• average real GDP growth of about 8 per cent;
• average consumer price inflation of a single digit;
• gross international reserves of not less than three months of import cover;
• overall budget deficit equivalent to 3.0 per cent of GDP;
• Stabilization of the total public debt at no more than 60 per cent of GDP.

Structural Policies
167.
Structural reforms will be pursued and strengthened in the medium term. In anticipation of revenue inflows from oil production, policies will be mapped out to ensure the maintenance of fiscal and debt sustainability.

Tax Administration
168.
One of the major challenges facing Ghana is how to broaden the tax net. The fact that the vast majority of Ghanaians are in the informal sector makes revenue generation a daunting task. Tax Administration will be strengthened to realize efficiency gains and broadening of the tax base.
169.
Tax exemptions constitute a significant proportion of about 9.0 per cent of total tax revenue. Revenue loss from exemptions granted in duties and taxes continue to rise. Government intends to review the exemptions regime as a whole to reduce the scope and to eliminate abuses in the administration and application of the facility. As a start, all exemptions resulting from the clearance of goods on “permit” will be curtailed. Work on the remaining types of exemptions will continue in order to achieve a comprehensive review in the medium term.

170.
Despite the above measures to rationalize and enhance revenue collection, government will look for opportunities to provide tax incentives to the private sector in key sectors of the economy.

Public Sector Reforms
171.
Government will review the reforms of the public sector and pursue an action plan to restructure subvented agencies that areno longer relevant to the government’s objectives. In this regard, there will be partial or full commercialization of selected subvented agencies.
Public Sector Wages
172.
Madam Speaker, the Government recognizes the wage issue as a major challenge and is, hence, committed to the public sector reforms that link wage settlement to increased productivity.
173.
These reforms are expected to solve the problems at the labour front, resulting partly from a distorted public sector salary structure which is also poorly administered.
174.
Significant progress has been made with the development of a draft framework for a comprehensive salary structure, the Single Spine, for all public sector workers (excluding Article 71 Constitutional Office Holders). The agreed processes will be discussed by all stakeholders, in order to arrive at a consensus
on implementation. The Single Spine structure aims to attain equity and transparency in public sector salaries while minimising leakages associated with the current pay system.
175.
We are committed to a programme for the distribution of the benefits of growth that will be targeted at providing the basic needs of the people. The programme will focus on the following:
• adequate nutrition and access of every person to potable water;
• access to preventive and curative medicine;
• affordable and adequate housing for low income workers and residents of rural and peri-urban communities;
• employment opportunities for all those who are willing and able to work;
• sustainable pension options for all citizens;
• a fundamental reform and restructuring of the economy through the modernization of agriculture and processing of agricultural and mineral products.
176.
We will invest in local communities as part of our rural modernization and urban regeneration strategy to cover the following:
• construction and rehabilitation of rural roads;
• provision of clinics and health posts;
• provision of schools and community libraries;
• extension of electricity to all communities with a population of over 500; construction of houses for teachers and health workers in the rural areas; and provision of social amenities in urban communities with high
levels of poverty.

Short-term Macroeconomic policies
177.
Our policy in 2009, will be reinforced to ensure macroeconomic stability in the context of a deteriorating
international environment so as to provide a temporary cushion to the domestic economy. Subsequently, the stable economy will enhance accelerated growth which will ensure the attainment of a middle income status by 2020. This strategy will be accomplished through fiscal discipline hinged on prudent public expenditure management, strict adherence to public procurement rules, efficient and effective domestic revenue mobilization, and encouraging the private sector to participate in our accelerated growth agenda through Public Private Partnerships (PPPs).
178.
The fiscal outlook is very critical to Government in achieving its objective of maintaining long-term fiscal and debt sustainability. There will be a decisive policy to improve expenditure management, enhance public financial management, restructure State-Owned Enterprises (SOEs) particularly the utility companies and ensure the success of the public sector reforms.
179.
In spite of the fiscal outturn for 2008, Government is committed to managing the macroeconomic situation to ensure that the macroeconomic targets change in the right direction in the short to medium term.

MACROECONOMIC POLICIES, STRATEGIES AND TARGETS FOR 2009
180.
In the 2008 Manifesto of the NDC, we pledged that an NDC Government would “establish a lean but effective and efficient government by cutting out ostentation and profligate expenditure; rationalizing ministries and ministerial appointments; and promoting service, humility and integrity as canons of government”.
181.
This is one of the main policy directions that this Budget seeks to achieve. As a first step towards the creation of a lean government, the total number of Ministries has been rationalized, reducing them from 27 to 23.
182.
Madam Speaker, based on the 2008 fiscal outturn, and the world economic outlook already outlined in Chapter Two of this Statement, our broad economic and financial objectives for 2009 include:
• real GDP growth of 5.9 per cent;
• average inflation target of 15.3 per cent;
• end period inflation of 12.5 per cent;
• an overall budget deficit equivalent to 9.4 per cent of GDP;
• gross international reserves of more than two months of
• import cover of goods and services.
183.
Considering the harsh global environment, these macroeconomic targets may look rather ambitious. However, we believe that
Ghana’s situation could be more favourable than other sub- Saharan African countries and emerging economies in general. We are, therefore, optimistic that these targets are achievable.

Fiscal Policy Challenges
184.
For 2009 in particular, and the medium term in general, the Government will be committed to correcting the large fiscal imbalance experienced since 2006 by focusing on, among others, tackling underlying issues to enhance domestic revenue mobilisation; rationalizing subsidies to State-Owned Enterprises (SOEs), particularly, in the energy sector; and rationalizing public sector wages and other expenditures.

GDP GROWTH FOR 2009
Outlook for 2009
185.
The GDP growth for 2009 is targeted at 5.9 per cent. This is informed by the global economic meltdown with a
resultant forecast of 0.5 per cent growth and 3.5 per cent foremerging economies. Our relatively higher GDP growth target is driven in part by our commitment to the agricultural sector which is relatively more insulated against global developments.
The private sector is also expected to contribute significantly to the growth
186.
Agriculture Sector growth rate is targeted at 5.7 per cent and will be based on the following measures among others:
• Increases in the area under cultivation of maize, rice and groundnut by about 24 per cent, 9 per cent and 1 per cent respectively;
• Government intervention in post-harvest handling of agricultural production, storage and processing facilities; and
• Improvement in the performance of local breeds of livestock.
187.
Industry Sector growth is projected at 5.9 per cent and the Services Sector is expected to grow at 6.6 per cent.

RESOURCES MOBILSATION AND ALLOCATION FOR 2009
Resource Mobilisation
188.
The total resource envelope or total receipts for the 2009 fiscal year is projected at GH¢9,793.1
million, equivalent to 45.8 per cent of GDP. The projected receipts for the year represents 2.7 per cent increase over the outturn for 2008.
189.
The apparent marginal increase in projected total receipts for 2009 over the outturn for 2008 can be attributed to the exceptionally huge inflows from divestiture receipts and the draw-down on receipts from the sovereign bond in 2008. This led to the large amount of total receipts recorded during the year. In 2009, however, these exceptional receipts will not recur.
190.
Domestic revenue, consisting of tax and non-tax revenue, is projected at GH¢5,935.1 million, a 23.6 per cent increase over the outturn for 2008.
191.
Total tax revenue comprising revenues from the Internal Revenue Service (IRS), Customs Excise and Preventive Service (CEPS) and Value Added Tax Service (VATS) is projected at GH¢5,117.1 million, representing 23.9 per cent of GDP. The 2009 estimate for tax revenue shows an increase of 19.0 per cent over the outturn for 2008.
192.
Out of the projected tax revenue, direct taxes are estimated at GH¢1,554.5 million, accounting for 30.4 per cent of total tax revenue. This amount indicates a 24.0 per cent increase over the outturn for 2008.
193.
Indirect taxes are projected to increase by 25.1 per cent from the 2008 level to GH¢1,917.4 million in 2009. The estimate for 2009 is made up of GH¢1,418.5 million for total VAT, with petroleum and excise taxes yielding GH¢436.2 million and GH¢62.7 million, respectively.
194.
International Trade taxes, comprising import and export duties, are projected at GH¢922.5 million, representing 4.3 per cent of GDP and 17.8 per cent of total tax revenue. The estimate indicates a 28.2 per cent increase over the outturn for 2008. Import duties constitute about 95 per cent of the projected international trade taxes for 2009.
195.
The National Health Insurance Levy (NHIL) is estimated to yield an amount of GH¢375.2 million, representing 1.8 per cent of GDP and an increase of 17.9 per cent over the outturn for 2008. The yield from the NHIL includes
an amount of GH¢117.4 million from the Social Security and National Insurance Trust (SSNIT).
196.
Non-Tax Revenue is projected at GH¢590.9 million, equivalent to 2.8 per cent of GDP. Out of this amount, GH¢386.9 million is to be retained by the MDAs and GH¢204.0 million will be lodged for general government budgetary support.
197.
Grants from development partners are projected at GH¢1,301.9 million, equivalent to 6.1 per cent of GDP. This is made up of project and programme grants of GH¢683.1 million and GH¢395.6 million, respectively. Highly Indebted Poor Country (HIPC) Assistance from multilateral institutions and, Multilateral Debt Relief Initiative (MDRI), are expected to yield GH¢130.0 million and GH¢93.3 million, respectively.
198.
Total loans are estimated at GH¢1,029.2 million, equivalent to 4.8 per cent of GDP. This is made up of Project and
Programme Loans of GH¢792.5 million and GH¢236.7 million, respectively.
199.
Exceptional financing made up of HIPC relief from our bilateral partners, is projected at GH¢134.7 million.

Resource Allocation
200.
Total payments for 2009 is projected at GH¢9,793.1 million. Of this amount, GH¢3,012.7 million,
equivalent to 14.1 per cent of GDP or 30.8 per cent of the total payments, is estimated for statutory payments and GH¢6,780.4 million, equivalent to 31.7 per cent of GDP as discretionary payments.

Statutory Payments
201.
Statutory payments, comprising all expenditure items which are mandatory, are estimated at GH¢3,012.7 million. The estimate for statutory payments indicates a 27.8 per cent increase over the outturn for 2008.
202.
External Debt Service is estimated at GH¢855.1 million, out of which GH¢537.9 million is estimated to be used for interest payments and the remaining for amortization.
203.
Domestic interest payments for the 2009 fiscal year are estimated at GH¢507.7 million.
204.

Central Government transfers to the District Assemblies Common Fund and Ghana Education Trust Fund are estimated to be GH¢345.7 million and GH¢275.1 million, respectively, and an amount of GH¢375.2 million will be
transferred to the National Health Insurance Fund.
205.
The Road Fund is expected to receive an amount of GH¢123.3 million, while GH¢3.5 million will be transferred into the Petroleum-related Fund, for the funding of exploration and other petroleum-related activities.
206.
Transfers to Households, which is made up of an amount of GH¢211.9 million for Pensions, GH¢95.6 million for Gratuities and GH¢219.7 million for Social Security contributions by Government on behalf of its employees, will amount to GH¢527.2 million, equivalent to 2.5 per cent of GDP.

Discretionary Payments
207.
Total discretionary payments is estimated to be GH¢6,780.4 million, equivalent to 68.9 per cent of total
payments. The estimate is 5.6 per cent lower than the outturn recorded in 2008. The low projection is mainly explained by the non-recurring expenditures including the sovereign bond proceeds which occurred in 2008.
208.
Personal emoluments (item 1) for 2009 is estimated at GH¢2,533.8 million, representing 11.8 per cent of GDP, 42.5 percent of domestic revenue, and 37.9 per cent of total discretionary payments.
209.
In 2009, some salary related allowances which are currently classified as part of administration expenditure (item 2) have been consolidated with the basic salary. This partly explains the increase in the wage bill from 11.5 per cent of GDP in 2008 to 11.8 per cent of GDP in 2009.
210. Of the estimated GH¢2,533.8 million, the allowances are estimated at GH¢324.0 million equivalent to 1.5 per cent of GDP. Thus, in 2009 the estimated wage bill excluding the allowances is equivalent to 10.3 per cent of GDP. This compares with the outturn of 11.5 per cent of GDP for 2008.
211.
Administration and Service (Items 2 and 3) expenses for MDAs are estimated at GH¢266.3 million and
GH¢149.0 million, respectively. The two together represent 1.9 per cent of GDP, 7.0 per cent of domestic revenue, and 6.1 per cent of discretionary payments. The estimates for items 2 and 3 are 36.0 per cent lower than the outturn for 2008.
212.
The consolidation of category 1 allowances as part of personal emoluments for 2009 explains the reduction in the estimate for items 2.
213.
As part of Government’s policy to reduce the budget deficit through expenditure rationalization, service activities in the areas of foreign travels, workshops and seminars are to be curtailed. This accounts for the reduction in item 3 expenses.
214.
Domestic-Financed Investment (excluding those financed from statutory funds) are projected to be GH¢305.8 million, equivalent to 1.4 per cent of GDP and 4.5 per cent of discretionary payments.
215.
An amount of GH¢1,475.6 million, equivalent to 6.9 per cent of GDP and 21.8 per cent of total discretionary expenditures is estimated for Foreign Financed Investment.
216.
Other transfers are estimated at GH¢905.7 million, out of which GH¢35.0 million will be used to mitigate the impact of petroleum price liberalization, while an amount of GH¢19.0 million is being projected for reimbursement to ECG in respect of subsidies to lifeline consumers of electricity. An amount of GH¢386.9 million of internally generated funds is expected to be retained by MDAs, while import duty exemptions (classified as tax expenditure) are estimated at GH¢464.8.
217.
Madam Speaker, total receipts from the HIPC debt relief initiative is estimated at GH¢264.7 million. As has been the practice, 20 per cent of receipts from the HIPC debt relief initiative will be used for the reduction of domestic debt. In 2009, 50 per cent of the HIPC relief totaling GH¢131.8 million will be distributed to MDAs, MMDAs and other institutions for the implementation of activities aimed at reducing poverty andimproving the economic and social conditions of Ghanaians. The remaining 30 per cent will be used as general budgetary
support.
218.
MDRI-financed expenditure is projected at GH¢93.3 million.
219.
An amount of GH¢344.5 million has been provided in a reserve fund for the payment of judgment debts, payment into the Northern Development Fund, and purchase of strategic oil stocks, among others.
220.
A total amount of GH¢533.5 million has been set aside for the settlement of payments that were due but not made in 2008.
on prudent expenditure management with the view to reducing unproductive expenditures to the barest minimum.

Monetary Policy
Monetary policy will support fiscal policy, focusing on sharply reducing inflationary pressures and stabilising price and exchange rate expectations on the market. The Bank of Ghana (BoG) will direct monetary policy towards reducing the end period inflation, and strengthen its inflation targeting framework.
The flexible exchange rate regime will be maintained and foreign exchange interventions will only be used as an
instrument to smooth out volatility in the foreign exchange market.
Measures will be introduced to encourage further development of the market for bonds and other long-term securities, mobilize savings for investment and restructure the financial system to enhance the flow of credit to the productive sectors.

Medium-term Macroeconomic Targets
In line with the medium-term policies, the following are the main macroeconomic targets:
• average real GDP growth of about 8 per cent;
• average consumer price inflation of a single digit;
• gross international reserves of not less than three months of import cover;
• overall budget deficit equivalent to 3.0 per cent of GDP;
• Stabilization of the total public debt at no more than 60 per cent of GDP.

Structural Policies
Structural reforms will be pursued and strengthened in the medium term. In anticipation of revenue inflows from oil production, policies will be mapped out to ensure the maintenance of fiscal and debt sustainability.

Tax Administration
One of the major challenges facing Ghana is how to broaden the tax net. The fact that the vast majority of Ghanaians are in the informal sector makes revenue generation a daunting task. Tax Administration will be strengthened to realize efficiency gains and broadening of the tax base.
Tax exemptions constitute a significant proportion of about 9.0 per cent of total tax revenue. Revenue loss from exemptions granted in duties and taxes continue to rise. Government intends to review the exemptions regime as a whole to reduce the scope and to eliminate abuses in the administration and application of the facility. As a start, all exemptions resulting from the clearance of goods on “permit” will be curtailed. Work on the remaining types of exemptions will continue in order to achieve a comprehensive review in the medium term.
Despite the above measures to rationalize and enhance revenue collection, government will look for opportunities to provide tax incentives to the private sector in key sectors of the economy.

Public Sector Reforms
Government will review the reforms of the public sector and pursue an action plan to restructure subvented agencies that areno longer relevant to the government’s objectives. In this regard, there will be partial or full commercialization of selected subvented agencies.
Public Sector Wages
Madam Speaker, the Government recognizes the wage issue as a major challenge and is, hence, committed to the public sector reforms that link wage settlement to increased productivity.
These reforms are expected to solve the problems at the labour front, resulting partly from a distorted public sector salary structure which is also poorly administered.
Significant progress has been made with the development of a draft framework for a comprehensive salary structure, the Single Spine, for all public sector workers (excluding Article 71 Constitutional Office Holders). The agreed processes will be discussed by all stakeholders, in order to arrive at a consensus on implementation. The Single Spine structure aims to attain equity and transparency in public sector salaries while minimising leakages associated with the current pay system.
We are committed to a programme for the distribution of the benefits of growth that will be targeted at providing the basic needs of the people. The programme will focus on the following:
• adequate nutrition and access of every person to potable water;
• access to preventive and curative medicine;
• affordable and adequate housing for low income workers and residents of rural and peri-urban communities;
• employment opportunities for all those who are willing and able to work;
• sustainable pension options for all citizens;
• a fundamental reform and restructuring of the economy through the modernization of agriculture and processing of agricultural and mineral products.
We will invest in local communities as part of our rural modernization and urban regeneration strategy to cover the following:
• construction and rehabilitation of rural roads;
• provision of clinics and health posts;
• provision of schools and community libraries;
• extension of electricity to all communities with a population of over 500; construction of houses for teachers and health workers in the rural areas; and provision of social amenities in urban communities with high levels of poverty.

Short-term Macroeconomic policies
Our policy in 2009, will be reinforced to ensure macroeconomic stability in the context of a deteriorating international environment so as to provide a temporary cushion to the domestic economy. Subsequently, the stable economy will enhance accelerated growth which will ensure the attainment of a middle income status by 2020. This strategy will be accomplished through fiscal discipline hinged on prudent public expenditure management, strict adherence to public procurement rules, efficient and effective domestic revenue mobilization, and encouraging the private sector to participate in our accelerated growth agenda through Public Private Partnerships (PPPs).
The fiscal outlook is very critical to Government in achieving its objective of maintaining long-term fiscal and debt sustainability. There will be a decisive policy to improve expenditure management, enhance public financial management, restructure State-Owned Enterprises (SOEs) particularly the utility companies and ensure the success of the public sector reforms.
In spite of the fiscal outturn for 2008, Government is committed to managing the macroeconomic situation to ensure that the macroeconomic targets change in the right direction in the short to medium term.

MACROECONOMIC POLICIES, STRATEGIES AND TARGETS FOR 2009
In the 2008 Manifesto of the NDC, we pledged that an NDC Government would “establish a lean but effective and efficient government by cutting out ostentation and profligate expenditure; rationalizing ministries and ministerial appointments; and promoting service, humility and integrity as canons of government”.
This is one of the main policy directions that this Budget seeks to achieve. As a first step towards the creation of a lean government, the total number of Ministries has been rationalized, reducing them from 27 to 23.
Based on the 2008 fiscal outturn, and the world economic outlook already outlined in Chapter Two of this Statement, our broad economic and financial objectives for 2009 include:
• real GDP growth of 5.9 per cent;
• average inflation target of 15.3 per cent;
• end period inflation of 12.5 per cent;
• an overall budget deficit equivalent to 9.4 per cent of GDP;
• gross international reserves of more than two months of
• import cover of goods and services.
Considering the harsh global environment, these macroeconomic targets may look rather ambitious. However, we believe that
Ghana’s situation could be more favourable than other sub- Saharan African countries and emerging economies in general. We are, therefore, optimistic that these targets are achievable.

Fiscal Policy Challenges
For 2009 in particular, and the medium term in general, the Government will be committed to correcting the large fiscal imbalance experienced since 2006 by focusing on, among others, tackling underlying issues to enhance domestic revenue mobilisation; rationalizing subsidies to State-Owned Enterprises (SOEs), particularly, in the energy sector; and rationalizing public sector wages and other expenditures.

GDP GROWTH FOR 2009
Outlook for 2009
The GDP growth for 2009 is targeted at 5.9 per cent. This is informed by the global economic meltdown with a resultant forecast of 0.5 per cent growth and 3.5 per cent foremerging economies. Our relatively higher GDP growth target is driven in part by our commitment to the agricultural sector which is relatively more insulated against global developments.
The private sector is also expected to contribute significantly to the growth
Agriculture Sector growth rate is targeted at 5.7 per cent and will be based on the following measures among others:
• Increases in the area under cultivation of maize, rice and groundnut by about 24 per cent, 9 per cent and 1 per cent respectively;
• Government intervention in post-harvest handling of agricultural production, storage and processing facilities; and
• Improvement in the performance of local breeds of livestock.
Industry Sector growth is projected at 5.9 per cent and the Services Sector is expected to grow at 6.6 per cent.

RESOURCES MOBILISATION AND ALLOCATION FOR 2009
Resource Mobilisation
The total resource envelope or total receipts for the 2009 fiscal year is projected at GH¢9,793.1 million, equivalent to 45.8 per cent of GDP. The projected receipts for the year represents 2.7 per cent increase over the outturn for 2008.
The apparent marginal increase in projected total receipts for 2009 over the outturn for 2008 can be attributed to the exceptionally huge inflows from divestiture receipts and the draw-down on receipts from the sovereign bond in 2008. This led to the large amount of total receipts recorded during the year. In 2009, however, these exceptional receipts will not recur.
Domestic revenue, consisting of tax and non-tax revenue, is projected at GH¢5,935.1 million, a 23.6 per cent increase over the outturn for 2008.
Total tax revenue comprising revenues from the Internal Revenue Service (IRS), Customs Excise and Preventive Service (CEPS) and Value Added Tax Service (VATS) is projected at GH¢5,117.1 million, representing 23.9 per cent of GDP. The 2009 estimate for tax revenue shows an increase of 19.0 per cent over the outturn for 2008.
Out of the projected tax revenue, direct taxes are estimated at GH¢1,554.5 million, accounting for 30.4 per cent of total tax revenue. This amount indicates a 24.0 per cent increase over the outturn for 2008.
Indirect taxes are projected to increase by 25.1 per cent from the 2008 level to GH¢1,917.4 million in 2009. The estimate for 2009 is made up of GH¢1,418.5 million for total VAT, with petroleum and excise taxes yielding GH¢436.2 million and GH¢62.7 million, respectively.
International Trade taxes, comprising import and export duties, are projected at GH¢922.5 million, representing 4.3 per cent of GDP and 17.8 per cent of total tax revenue. The estimate indicates a 28.2 per cent increase over the outturn for 2008. Import duties constitute about 95 per cent of the projected international trade taxes for 2009.
The National Health Insurance Levy (NHIL) is estimated to yield an amount of GH¢375.2 million, representing 1.8 per cent of GDP and an increase of 17.9 per cent over the outturn for 2008. The yield from the NHIL includes an amount of GH¢117.4 million from the Social Security and National Insurance Trust (SSNIT).
Non-Tax Revenue is projected at GH¢590.9 million, equivalent to 2.8 per cent of GDP. Out of this amount, GH¢386.9 million is to be retained by the MDAs and GH¢204.0 million will be lodged for general government budgetary support.
Grants from development partners are projected at GH¢1,301.9 million, equivalent to 6.1 per cent of GDP. This is made up of project and programme grants of GH¢683.1 million and GH¢395.6 million, respectively. Highly Indebted Poor Country (HIPC) Assistance from multilateral institutions and, Multilateral Debt Relief Initiative (MDRI), are expected to yield GH¢130.0 million and GH¢93.3 million, respectively.
Total loans are estimated at GH¢1,029.2 million, equivalent to 4.8 per cent of GDP. This is made up of Project and
Programme Loans of GH¢792.5 million and GH¢236.7 million, respectively.
Exceptional financing made up of HIPC relief from our bilateral partners, is projected at GH¢134.7 million.

Resource Allocation
Total payments for 2009 is projected at GH¢9,793.1 million. Of this amount, GH¢3,012.7 million, equivalent to 14.1 per cent of GDP or 30.8 per cent of the total payments, is estimated for statutory payments and GH¢6,780.4 million, equivalent to 31.7 per cent of GDP as discretionary payments.

Statutory Payments
Statutory payments, comprising all expenditure items which are mandatory, are estimated at GH¢3,012.7 million. The estimate for statutory payments indicates a 27.8 per cent increase over the outturn for 2008.
External Debt Service is estimated at GH¢855.1 million, out of which GH¢537.9 million is estimated to be used for interest payments and the remaining for amortization.
Domestic interest payments for the 2009 fiscal year are estimated at GH¢507.7 million.
Central Government transfers to the District Assemblies Common Fund and Ghana Education Trust Fund are estimated to be GH¢345.7 million and GH¢275.1 million, respectively, and an amount of GH¢375.2 million will be transferred to the National Health Insurance Fund.
The Road Fund is expected to receive an amount of GH¢123.3 million, while GH¢3.5 million will be transferred into the Petroleum-related Fund, for the funding of exploration and other petroleum-related activities.
Transfers to Households, which is made up of an amount of GH¢211.9 million for Pensions, GH¢95.6 million for Gratuities and GH¢219.7 million for Social Security contributions by Government on behalf of its employees, will amount to GH¢527.2 million, equivalent to 2.5 per cent of GDP.

Discretionary Payments
Total discretionary payments is estimated to be GH¢6,780.4 million, equivalent to 68.9 per cent of total
payments. The estimate is 5.6 per cent lower than the outturn recorded in 2008. The low projection is mainly explained by the non-recurring expenditures including the sovereign bond proceeds which occurred in 2008.
Personal emoluments (item 1) for 2009 is estimated at GH¢2,533.8 million, representing 11.8 per cent of GDP, 42.5 percent of domestic revenue, and 37.9 per cent of total discretionary payments.
In 2009, some salary related allowances which are currently classified as part of administration expenditure (item 2) have been consolidated with the basic salary. This partly explains the increase in the wage bill from 11.5 per cent of GDP in 2008 to 11.8 per cent of GDP in 2009.
Of the estimated GH¢2,533.8 million, the allowances are estimated at GH¢324.0 million equivalent to 1.5 per cent of GDP. Thus, in 2009 the estimated wage bill excluding the allowances is equivalent to 10.3 per cent of GDP. This compares with the outturn of 11.5 per cent of GDP for 2008.
Administration and Service (Items 2 and 3) expenses for MDAs are estimated at GH¢266.3 million and
GH¢149.0 million, respectively. The two together represent 1.9 per cent of GDP, 7.0 per cent of domestic revenue, and 6.1 per cent of discretionary payments. The estimates for items 2 and 3 are 36.0 per cent lower than the outturn for 2008.
The consolidation of category 1 allowances as part of personal emoluments for 2009 explains the reduction in the estimate for items 2.
As part of Government’s policy to reduce the budget deficit through expenditure rationalization, service activities in the areas of foreign travels, workshops and seminars are to be curtailed. This accounts for the reduction in item 3 expenses.
Domestic-Financed Investment (excluding those financed from statutory funds) are projected to be GH¢305.8 million, equivalent to 1.4 per cent of GDP and 4.5 per cent of discretionary payments.
An amount of GH¢1,475.6 million, equivalent to 6.9 per cent of GDP and 21.8 per cent of total discretionary expenditures is estimated for Foreign Financed Investment.
Other transfers are estimated at GH¢905.7 million, out of which GH¢35.0 million will be used to mitigate the impact of petroleum price liberalization, while an amount of GH¢19.0 million is being projected for reimbursement to ECG in respect of subsidies to lifeline consumers of electricity. An amount of GH¢386.9 million of internally generated funds is expected to be retained by MDAs, while import duty exemptions (classified as tax expenditure) are estimated at GH¢464.8.
Total receipts from the HIPC debt relief initiative is estimated at GH¢264.7 million. As has been the practice, 20 per cent of receipts from the HIPC debt relief initiative will be used for the reduction of domestic debt. In 2009, 50 per cent of the HIPC relief totaling GH¢131.8 million will be distributed to MDAs, MMDAs and other institutions for the implementation of activities aimed at reducing poverty andimproving the economic and social conditions of Ghanaians. The remaining 30 per cent will be used as general budgetary support.
MDRI-financed expenditure is projected at GH¢93.3 million.
An amount of GH¢344.5 million has been provided in a reserve fund for the payment of judgment debts, payment into the Northern Development Fund, and purchase of strategic oil stocks, among others.
A total amount of GH¢533.5 million has been set aside for the settlement of payments that were due but not made in 2008.
Overall Budget Balance and Financing
The 2009 budget envisages an overall budget deficit equivalent to 9.4 per cent of GDP.
The overall budget deficit is expected to be financed from both domestic and foreign sources. Net Domestic Financing of the budget is estimated at GH¢1,392.2 million, equivalent to 6.5 per cent of GDP. Financing from foreign sources are projected at GH¢626.0 million, equivalent to 2.9 per cent of GDP.

EXTERNAL OUTLOOK FOR 2009
Outlook for 2009
Public Debt and Financing Strategy
The core strategy for public debt management is to control the rate of growth of total public debt.
Public debt is largely expected to be kept at sustainable levels, and consequently, total public debt to GDP ratio is expected to be below a targeted limit of 60 per cent in the medium term.

External Debt Management Strategy
The external debt strategy will be to seek for soft loans for mainly social projects, and access commercial facilities for economically viable, self-financing and strategic projects. There will be significant efforts to attract products that involve liability sharing between government and the private sector in the form of Public Private Partnerships (PPPs) and prudent levels of contingent liabilities and on-lending facilities.
The following strategic risk benchmarks will be pursued as a forward looking risk management strategy in the medium term.

Foreign Currency Risk Benchmarks
Foreign currency debt obligation will be aligned to the country’s foreign exchange receipts in order to minimize exposure to major foreign currencies.

Interest Rate Risk Benchmark
The current structure of interest rates does not suggest any eminent interest rate risk. However, the floating rate component which could pose danger in times of crisis would be closely monitored and kept under the internationally accepted range of 25 to 35 per cent.

HIPC AND MDRI – Receipt Account
During 2009, it is expected that a total of about GH¢358 million (US$238.67 million) will be lodged in the debt relief accounts, consisting of GH¢264.73 million and GH¢93.27 million for HIPC and MDRI, respectively.
The Government of Spain has committed to deliver additional debt relief in the form of debt-for-development to contribute to the socio-economic development of Ghana. The total amount of debt relief involved is US$44.36 million. This is to be provided over a seven year period, and will be deposited in a Ghana-Spain Debt for Development Swap Trust Fund. The use of funds and selection of projects will be agreed by a Joint GOG- Spanish Committee to be set up.

Domestic Debt Management Strategy
Effective domestic debt management will be one of the critical aspects of the Government’s economic programme during this fiscal year and in the medium term.
The increasing size of the domestic debt and its debt service burden points to an urgent need for Government to pursue sound and effective strategies to reduce the domestic debt to sustainable levels. Over the medium term, it is envisaged that debt management strategies will be supported by continuous fall in interest rates, a stable exchange rate environment and a reduction in fiscal deficit.
Debt management strategies over the medium term are intended to achieve the following four broad objectives: satisfying the government’s annual financing requirements; minimizing borrowing and debt service costs; achieving a balanced maturity structure of debt; and deepening a well-functioning Government of Ghana securities market by providing key pricing and hedging tools.

Primary Dealer System and Secondary Market Development
The primary dealer system will be reviewed under the current benefits and obligations with probationary Primary Dealers (PDs) in the new system. A feedback system and rules book will be developed during the year.

Improvement of Issue Calendar
It has been difficult to pre-commit to a specific issue programme in advance. The goal is to reduce the frequency of government debt issue and to make public, in advance, the specific instruments and size. This would provide the market with a clear indication of when an instrument will be issued and some broad guidance on the likely amount.

Monetary Policy
The Bank of Ghana will focus on reducing the rate of inflation to 12.5 per cent by the end of 2009 and further to 10.0 per cent in 2010 and 8 per cent in 2011. Underlying this medium term forecast of inflation is a fiscal consolidation path which will stabilize domestic debt and help anchor inflation expectations.

Price and Monetary Outlook
The medium term inflation forecast shows inflation declining to 12.5 per cent in 2009 to 8 per cent in 2011. The key challenges underlying the forecast is the fiscal policy stance and in particular wage policy in 2009 and a resurgence in prices of crude oil currently forecasted to rebound in 2010. The Bank of Ghana will use its inflation targeting framework to guide inflation expectations in line with the forecast.

External Outlook
The overall objective for the external sector will be to build up adequate reserves to cushion the economy from external shocks. The reserve build up in 2006-2007 served the economy well and allowed it to withstand the oil and food price shocks in 2008 to a large extent. This objective of shoring up reserves is in a context of a global economic crisis with potential risks to our sources of foreign exchange, exports, remittances and aid flows.
The balance of payments projections for 2009 indicate that exports will decrease by 7.6 per cent to US$ 4874.06 million. Cocoa exports are expected to decline by 2.8 per cent to US$1459.58 million reflecting a price decline of about 9 per cent. Gold exports receipts are expected to decline by 11.78 per cent due to a significant decline in gold export prices by 16.0 per cent. Private inward transfers are projected to decline by 7.5 per cent to US$ 1.7 billion.
It is anticipated that imports will also slowdown in 2009 by 16 per cent to US$8605.2 million reflecting a 15 per cent slow down in non oil imports and a 20 per cent slow down in oil imports. The slowdown in oil imports is due to a 41 per cent drop in oil prices to a projected $60 per barrel for 2009.
The overall current account balance (including official transfers) is projected to improve by 35 per cent driving the current account deficit GDP ratio from 20.87 per cent in 2008 to about 15 per cent in 2009.
This sharp improvement in the current account is expected to impact positively on the gross international reserves to cover two months of imports by the end of 2009.

SECTION SIX:
SECTORAL PERFORMANCE AND OUTLOOK
243.
The economic and social objectives that we have set for ourselves will be accomplished through well thought out policies programmes and projects which have already been clearly identified and articulated in our manifesto. These are reflected in the four broad thematic areas namely:
• transparent and accountable governance;
• a strong economy for real jobs;
• investing in people; and
• expanding infrastructure.
244.
The agenda to fundamentally reform and restructure the economy is impinged on the philosophy of growth with stability. Emphasis will be placed on accelerated agricultural modernization, improved rural economy, and food security. On the industrial front, the policy is to implement growth enhancing science and technology driven measures to ensure global competitiveness. Government will create the necessary environment for private sector operation with a view to encouraging Public-Private Partnership in service delivery.
245.
The programmes and activities of the Ministries, Departments, and Agencies (MDAs) are designed to achieve these broad goals. The MDAs are thus called upon to ensure speedy, effective, and efficient execution of the programmes as outlined in their budgets.
246.
I will now present the broad programme activities under the sector Ministries.

Private Sector Competitiveness
247.
The focus of private sector competitiveness under the GPRS II is to ensure accelerated growth through modernized agriculture and led by a vibrant private sector.
248.
The MDAs whose activities will enhance the capacity of the private sector as a partner for growth are the following:
• Ministry of Food and Agriculture (MOFA)
• Ministry of Lands and Natural Resources (MLNR)
• Ministry of Trade and Industry (MTI)
• Ministry of Tourism (MT)
• Ministry of Energy (MOE)
• Ministry of Water Resources, Works and Housing
(MWRWH)
• Ministry of Transport (MOT)
• Ministry of Roads and Highways (MRH)
• Ministry of Communication (MOC)
• Ministry of Environment, Science and Technology (MEST)

Ministry of Food and Agriculture
249.
The Ministry exists to develop a progressive, dynamic and viable agricultural economy that will ensure food
security, vulnerability and emergency preparedness, income growth and hence poverty reduction.

Performance in 2008
Crops Sub Sector
250.
The Ministry in its determination to increase Agriculture productivity, produced 50 mt, 16 mt and two mt of
maize, rice and sorghum foundation seeds, respectively, for food production. In addition, 16 mt and 40 mt of cowpea and soybean foundation seed were supplied to farmers for the production of certified seeds. It also boosted the production of 100,000 yam setts and 70 ha of cassava planting materials.
251.
The Ministry procured and tested twenty tractor mounted drill rigs for the promotion of sustainable water
harvesting and efficient water management. Furthermore, the Ministry procured 732 tractors, 200 power tillers and 220 manure shellers as part of effort to modernize agriculture.
252.
To enhance food security and sustainable production of major staples the Ministry produced and released
508,576 actives of typhlodromalus manihoti for the control of Cassava Green Mite and 39,000 actives of Teretrius migrescens against the Larger Grain Borer. It also equipped three insectaries and conducted three pest and disease surveys in three zones of the country.
253.
Under the Small Farm Irrigation Project, construction of irrigation facilities for an area of 492 ha was
completed for crop production. Similarly, under the Small Scale Irrigation Development Project, an area of 939 ha was developed and handed over to farmers for cropping.
254.
The Ministry conducted feasibility studies into surface water extraction for irrigation. Documentation on six
sites in the Eastern Region were submitted to Millennium Development Authority (MiDA) for implementation.
255.
Under the Cashew Development Project, four mt of Cashew seed nuts were procured and sold to farmers to
add on about 1,913 ha of cashew farms.

Livestock Sub-Sector
256.
The Ministry produced 5.3 million doses of NDI-2 vaccine to help control endemic poultry diseases such as Newcastle in rural poultry. About 122,800 doses of antrax spore vaccine, 62,400 doses of Black vaccine and 47,000 doses of hemorrhagic septicaemia vaccine at Pong-Tamale to enhance the peri-urban dairy cattle production.
257.
Madam Speaker, to conduct active surveillance, the Ministry participated in the ECOWAS Expert Consultation meeting on Avian Influenza in Abidjan. Avian Influenza (Bird Flu) staff of VSD were also trained and 350 Community Animal Health Workers (CAHWs) were also equipped to facilitate their work. Export Marketing and Quality Awareness Project (EMQAP)
258.
The Ministry developed standards for planting materials on mango, pineapple and citrus. Also, as part of the planting materials certification process, three mango farms have been selected and are being maintained as budwood gardens.
259.
The Ministry, procured and distributed 550 pheromone traps for the monitoring of fruit fly (bactrocera
invadems) populations in selected mango farms in outbreak zones in affected regions.
Sustainable Management of Land and Environment
260.
Madam Speaker, the Ministry developed and extended appropriate integrated soil fertility management practices by conducting on-farm testing of new technologies and integrated nutrient management technologies.
261.
Madam Speaker, 200 lead irrigation farmers were trained in efficient soil and water management technology and 3,000 seedlings of moringa were also supplied free of charge to farmers to facilitate lakefront protection. Application of Science and Technology
262.
The Ministry’s technology dissemination support programme, retrained all Agricultural Extension Agents to demonstrate best practices and proven technologies in both crop and livestock production to about 60,000 farmers
countrywide.

Fisheries Sector
A Draft Fisheries and Aquaculture Policy document which will allow for a smooth management of the fisheries sector was approved at a stakeholders’ workshop. In addition, a Draft Fisheries Regulation Bill was submitted to Parliament for passage into Law.
264.
The Ministry registered 5,000 fish farmers and over 30,000 fish ponds and cages throughout the country. The operations of all Tuna Fishing Vessels were regularised resulting in increased Tuna fish production in the country.

Outlook for 2009
The Government identifies the Agriculture Sector as Ghana’s greatest strength and critical for the country’s
industrial growth. In that regard, the following programmes and activities will be undertaken by the Ministry.

Food Security and Emergency Preparedness
266.
Government, will increase food production through the intensification of production on existing cropped lands for all food crops by expanding the areas under cultivation. Maize and rice production is expected to increase by 42.2 per cent and 22.8 per cent, respectively. The production of groundnuts, cowpea and soyabean are projected to increase by 24.4 per cent, 37.7 per cent and 11.5 per cent, respectively.
267.
Government will encourage farmers to expand the total acreage of cultivation in the areas devoted to maize, rice and groundnuts. The area under maize cultivation is expected to increase by 24 per cent while that under rice and groundnut cultivation are expected to increase by 9 per cent and 1 per cent, respectively.
268.
In response to the food needs of victims of natural hazards and other calamities, Government will utilize the
pro-cocoon technology to store about 900mt of maize as national strategic stock.
269.
Furthermore, warehouses, dryers and other facilities including the former Ghana Food Distribution Corporation will be rehabilitated for use in the national buffer stock programme.

Increasing Incomes
270.
To ensure the growth of incomes in the agricultural sector and reduction in income variability, there is the need to ensure diversification into cash crops, livestock and value addition on commodities. In this regard farmers will be encouraged in addition to their food crop farming activities to diversify into the cultivation of cash crops and livestock for which they have comparative and competitive advantages.

Tree Crop Development
271.
The production of oil palm, citrus, and rubber will be emphasized for the southern ecological zones and effort
will be made to increase the production of these crops by at least 200 ha each. In the northern ecological zones, the concentration will be on expanding the areas under cultivation for cashew, mango and cotton by 3,000 ha each.
272.
The Ministry will collaborate with the Council for Scientific and Industrial Research (CSIR) to find solutions for the development of sheaSECTION SIX:
SECTORAL PERFORMANCE AND OUTLOOK
The economic and social objectives that we have set for ourselves will be accomplished through well thought out policies programmes and projects which have already been clearly identified and articulated in our manifesto. These are reflected in the four broad thematic areas namely:
• transparent and accountable governance;
• a strong economy for real jobs;
• investing in people; and
• expanding infrastructure.
The agenda to fundamentally reform and restructure the economy is impinged on the philosophy of growth with stability. Emphasis will be placed on accelerated agricultural modernization, improved rural economy, and food security. On the industrial front, the policy is to implement growth enhancing science and technology driven measures to ensure global competitiveness. Government will create the necessary environment for private sector operation with a view to encouraging Public-Private Partnership in service delivery.
The programmes and activities of the Ministries, Departments, and Agencies (MDAs) are designed to achieve these broad goals. The MDAs are thus called upon to ensure speedy, effective, and efficient execution of the programmes as outlined in their budgets.
I will now present the broad programme activities under the sector Ministries.

Private Sector Competitiveness
The focus of private sector competitiveness under the GPRS II is to ensure accelerated growth through modernized agriculture and led by a vibrant private sector.
The MDAs whose activities will enhance the capacity of the private sector as a partner for growth are the following:
• Ministry of Food and Agriculture (MOFA)
• Ministry of Lands and Natural Resources (MLNR)
• Ministry of Trade and Industry (MTI)
• Ministry of Tourism (MT)
• Ministry of Energy (MOE)
• Ministry of Water Resources, Works and Housing
(MWRWH)
• Ministry of Transport (MOT)
• Ministry of Roads and Highways (MRH)
• Ministry of Communication (MOC)
• Ministry of Environment, Science and Technology (MEST)

Ministry of Food and Agriculture
The Ministry exists to develop a progressive, dynamic and viable agricultural economy that will ensure food security, vulnerability and emergency preparedness, income growth and hence poverty reduction.

Performance in 2008
Crops Sub-Sector
The Ministry in its determination to increase Agriculture productivity, produced 50 mt, 16 mt and two mt of maize, rice and sorghum foundation seeds, respectively, for food production. In addition, 16 mt and 40 mt of cowpea and soybean foundation seed were supplied to farmers for the production of certified seeds. It also boosted the production of 100,000 yam setts and 70 ha of cassava planting materials.
The Ministry procured and tested twenty tractor mounted drill rigs for the promotion of sustainable water harvesting and efficient water management. Furthermore, the Ministry procured 732 tractors, 200 power tillers and 220 manure shellers as part of effort to modernize agriculture.
To enhance food security and sustainable production of major staples the Ministry produced and released 508,576 actives of typhlodromalus manihoti for the control of Cassava Green Mite and 39,000 actives of Teretrius migrescens against the Larger Grain Borer. It also equipped three insectaries and conducted three pest and disease surveys in three zones of the country.
Under the Small Farm Irrigation Project, construction of irrigation facilities for an area of 492 ha was completed for crop production. Similarly, under the Small Scale Irrigation Development Project, an area of 939 ha was developed and handed over to farmers for cropping.
The Ministry conducted feasibility studies into surface water extraction for irrigation. Documentation on six sites in the Eastern Region were submitted to Millennium Development Authority (MiDA) for implementation.
Under the Cashew Development Project, four mt of Cashew seed nuts were procured and sold to farmers to add on about 1,913 ha of cashew farms.

Livestock Sub-Sector
The Ministry produced 5.3 million doses of NDI-2 vaccine to help control endemic poultry diseases such as Newcastle in rural poultry. About 122,800 doses of antrax spore vaccine, 62,400 doses of Black vaccine and 47,000 doses of hemorrhagic septicaemia vaccine at Pong-Tamale to enhance the peri-urban dairy cattle production.
To conduct active surveillance, the Ministry participated in the ECOWAS Expert Consultation meeting on Avian Influenza in Abidjan. Avian Influenza (Bird Flu) staff of VSD were also trained and 350 Community Animal Health Workers (CAHWs) were also equipped to facilitate their work. Export Marketing and Quality Awareness Project (EMQAP)
The Ministry developed standards for planting materials on mango, pineapple and citrus. Also, as part of the planting materials certification process, three mango farms have been selected and are being maintained as budwood gardens.
The Ministry, procured and distributed 550 pheromone traps for the monitoring of fruit fly (bactrocera invadems) populations in selected mango farms in outbreak zones in affected regions.
Sustainable Management of Land and Environment
The Ministry developed and extended appropriate integrated soil fertility management practices by conducting on-farm testing of new technologies and integrated nutrient management technologies.
Madam Speaker, 200 lead irrigation farmers were trained in efficient soil and water management technology and 3,000 seedlings of moringa were also supplied free of charge to farmers to facilitate lakefront protection. Application of Science and Technology
The Ministry’s technology dissemination support programme, retrained all Agricultural Extension Agents to demonstrate best practices and proven technologies in both crop and livestock production to about 60,000 farmers countrywide.

Fisheries Sector
A Draft Fisheries and Aquaculture Policy document which will allow for a smooth management of the fisheries sector was approved at a stakeholders’ workshop. In addition, a Draft Fisheries Regulation Bill was submitted to Parliament for passage into Law.
The Ministry registered 5,000 fish farmers and over 30,000 fish ponds and cages throughout the country. The operations of all Tuna Fishing Vessels were regularised resulting in increased Tuna fish production in the country.

Outlook for 2009
The Government identifies the Agriculture Sector as Ghana’s greatest strength and critical for the country’s industrial growth. In that regard, the following programmes and activities will be undertaken by the Ministry.

Food Security and Emergency Preparedness
Government, will increase food production through the intensification of production on existing cropped lands for all food crops by expanding the areas under cultivation. Maize and rice production is expected to increase by 42.2 per cent and 22.8 per cent, respectively. The production of groundnuts, cowpea and soyabean are projected to increase by 24.4 per cent, 37.7 per cent and 11.5 per cent, respectively.
Government will encourage farmers to expand the total acreage of cultivation in the areas devoted to maize, rice and groundnuts. The area under maize cultivation is expected to increase by 24 per cent while that under rice and groundnut cultivation are expected to increase by 9 per cent and 1 per cent, respectively.
In response to the food needs of victims of natural hazards and other calamities, Government will utilize the pro-cocoon technology to store about 900mt of maize as national strategic stock.
Furthermore, warehouses, dryers and other facilities including the former Ghana Food Distribution Corporation will be rehabilitated for use in the national buffer stock programme.

Increasing Incomes
To ensure the growth of incomes in the agricultural sector and reduction in income variability, there is the need to ensure diversification into cash crops, livestock and value addition on commodities. In this regard farmers will be encouraged in addition to their food crop farming activities to diversify into the cultivation of cash crops and livestock for which they have comparative and competitive advantages.
Tree Crop Development
The production of oil palm, citrus, and rubber will be emphasized for the southern ecological zones and effort will be made to increase the production of these crops by at least 200 ha each. In the northern ecological zones, the concentration will be on expanding the areas under cultivation for cashew, mango and cotton by 3,000 ha each.
The Ministry will collaborate with the Council for Scientific and Industrial Research (CSIR) to find solutions for the development of sheanuts and dawadawa industries.

Livestock Development
Government will support a pilot project to encourage small scale production of household poultry for a quick turnaround by engaging hatchery operators to hatch two million chicks for distribution to farmers. Guinea fowl farmers in the three Northern regions will also be supported with incubators to produce keets for farmers.
To improve the performance of our local breeds of livestock, Government will supply improved breeds of sheep, goats, pigs and cattle from its breeding stations.
About 16 boreholes and 32 dugouts for livestock watering will be provided under the Livestock Development Project (LDP) in the Northern Region. Another 120 ha of fodder banks will be established to ensure the availability of fodder both in the dry and wet seasons.
Furthermore, 1,000 ruminant farmers will be trained on hay silage conservation and utilization of forage, and in the use of urea to treat crop residue. Similarly 500 ha of communal grazing grounds in main livestock producing districts will be over sown to increase fodder production.
With regards to animal health, farmers will be trained on how to recognize, prevent and control African Swine Fever (ASF); Foot and Mouth Disease; Contagious Bovine Pleuropneumonia (CBPP); New Castle Disease (NCD); and Pestes de Petit Ruminants (PPR).
Government will institute appropriate measures to control the incidence and spread of Avian Influenza. The Pong-Tamale and Accra veterinary laboratories will be enhanced to increase the manufacture of poultry and livestock vaccines locally. Also, 300Community Animal Health Workers (CAHWs) will be trained and equipped to facilitate their work. Mass vaccination against rabbies will be carried out nationwide.

Youth in Agriculture
Under the Youth in Agriculture Development Project 1,200 youth will be trained in agri-business. Another 7,000 youth will be supported with inputs to cultivate 5,600 ha of maize, rice or sorghum in 70 districts. About 4,000 youth will be supported with modern inputs and irrigation facilities to undertake farming in the dry season. Suitable lands will be identified and negotiated with chiefs and land owners for the youth in agriculture development programme. An implementation manual for Junior Farm Field and Life Schools (JFFLS) will be developed.

Sustainable Land and Environment Management
An Agricultural Land Management Strategy will be implemented as a tool to address the unsustainable use of land for agricultural purposes. Also, effort will be made to get stakeholders in the agriculture sector to use sustainable land management practices. The Ministry will further collaborate with the Ministry of Environment, Science and Technology to develop a Country Investment Framework for a sustainable land management.


Increased Competitiveness and Enhanced Integration
The Ministry intends to ensure the efficient operation and management of the modern fruit/vegetable terminal (Shed 9) at Tema Port, pursue the construction of a Perishable Products Cargo Centre (PPCC) at the Kotoka
International Airport and introduce on pilot basis standards (grades and weights) in domestic marketing of agricultural products.
To meet the standards on the international market, agricultural producers and exporters will be trained to get certification to meet EUROGAP and GLOBAGAP standards. The Government will gazette the standards developed for planting materials for mango, pineapple and citrus.
Agricultural Extension Agents (AEAs) in main export crop producing areas will be trained in the requisite skills in export crop production. In addition, training will also be given to farmers to meet organic certification standards. Promoting Quality Planting Material
Government will supply quality seeds and planting materials to farmers to boost increases in crop production. It will also produce and distribute 50mt of maize, 16mt of rice and 2mt of sorghum foundation seeds for the production of certified seeds.

Agricultural Mechanization
Government will promote sustainable water harvesting and efficient water management technologies by training about 20 technicians in ground water exploration technology and drill 300 boreholes for use in irrigation.
The Ministry, in collaboration with the Kwame Nkrumah University of Science and Technology (KNUST) will start a mechanization training centre for short-term training of tractor operators, mechanics, and owners. An additional 9 agricultural mechanization centres will be set up to increase mechanization service delivery in the country.

Irrigation Development
To mitigate the effects of unreliable rainfall and increase employment opportunities in the dry season, the Ministry will develop new irrigation facilities and rehabilitate existing facilities in order to expand the area under irrigation.
The Ministry will rehabilitate 41 dams and dugouts that were breached during the 2007 floods for 72 communities in the Northern, Upper East and Upper West Regions. In addition, the Ministry will complete the rehabilitation of the Tono Irrigation Project. The Ministry will continue the development of irrigation facilities under the Small Scale Irrigation Development Project and the Small Farms Irrigation Development Project.
Work on the feasibility study for the Accra Plains Irrigation Project which was initiated in 2008 will be completed. The Ministry will also promote dry season production using portable pumping machines to pump water from perennial sources in the country. The Ministry will further establish about 45 sprinkler irrigation schemes along the main perennial rivers.

Improving Extension Service Delivery
The Agricultural Extension Agents (AEAs) will be strengthened to conduct crop and livestock demonstrations to show best practices and proven technologies in about 12,500 communities. To reach out to more farmers, the Ministry will employ the use of audio-visual mobile vans, print and electronic mass media for agricultural technology dissemination.

Effective Institutional Coordination
The Ministry has recognized that the private sector and civil society play important roles in the development
of the agricultural sector. To promote a private sector led agriculture development, the Ministry will increase the involvement of the private sector and NGOs in the delivery of services such as farmer training, Farmer Based Organization (FBO) development, input procurement and distribution and provision of technical services.

Fisheries Commission
Government will intensify the promotion of aquaculture developments to manage the capture fisheries on a more sustainable basis. In the year under review Government intends to increase fish production by about 20 per cent.
In aquaculture, Government will increase the farmed fish production from 6,500 tons to 10,000 tons through the following interventions:
• Private Public Sector Participation in cage culture operation;
• Rehabilitation of existing public hatchery at Dormaa Ahenkro and also facilitate the establishment of more private hatcheries;
• Facilitating the development of fish feed and fingerlings;
• Establishing structures for the construction of small scale and commercial farms; and
• Undertake disease management and quality control of farmed fish.
Government will facilitate the procurement of aquaculture and captured fisheries inputs at affordable prices. In addition, Government will review all existing agreements within Ghana°os territorial waters to ensure that the livelihood and long term interest of our fishermen and residents of our coastal communities are guaranteed.
295.
For the implementation of the above activities, an amount of GH ¢202,629,307 has been allocated. Out of this, GoG is GH ¢60,541,825, IGF is GH ¢3,210,940, Donor is GH ¢138,876,542 Cocoa Industry
296.
Government will give all the required support to the cocoa sub-sector to ensure that it achieves its maximum
potential to enable the sub-sector enhance its significant contribution to the growth of GDP, foreign exchange earnings, employment generation and poverty reduction in the country

Performance in 2008
297.
During the early stages of the 2007/2008 Crop Season, the producer price paid per tonne was GH¢950.00,
about 70.97 per cent of the net fob. It was subsequently increased in February, 2008 to GH¢1,200.00, representing about 74.62 per cent of the net fob price.
298.
The Ghana Cocoa Board (COCOBOD) purchased 680,780.00 metric tonnes of cocoa in the 2007/2008 Main Crop Season, paid GH¢21,214,468.62 to cocoa farmers as the first tranche of bonus and intensified its Diseases and Pests Control Programme (CODAPEC).
299.
The COCOBOD continued its Hi-Tech programme by encouraging the use of fertilizer application and improved
planting materials in the 2007/2008 Crop Season. Domestic Processing
300.
The current installed domestic processing capacity is around 313,000 mt. It is in line with the target of processing 50 per cent of cocoa beans locally by the year 2010/2011 as a medium term policy of the previous government.