Ghana’s terms of trade register increases

Finance Minister Kwabena Duffuor on Thursday asked the Legislature to approve GH¢1,463,123,559 as supplementary budget of Government for the 2011 financial year.

He was presenting the mid-year review of the budget statement and economic policy and supplementary estimates for the 2011 financial year to Parliament in Accra.

Dr Duffuor said the move was in consonance with developments in both the domestic and global environment that had necessitated some variations in the assumptions underlying the 2011 Budget and Economic Policy presented to Parliament in November 2010.

Notable among these are the passage and implementation of the Petroleum Revenue Management Act (PRMA), 2011, Act 815 Act, coupled with increases in crude oil price on the world market and production volumes that had necessitated the upward adjustment in revenue projections.

Other considerations are the receipt of two major inflows from the World Bank and sale of Anglogold shares in lieu of royalties expected in 2010 that were realized in the first quarter of 2011 and increased revenue collections from tax administrative measures.

He said Ghana’s export earnings registered an increase of 36.3 per cent from $5,839.7 million in 2009 to $7,960.1 million in 2010.

The improvement was largely due to an upsurge in gold and cocoa earnings.

Imports rose 35.7 per cent to $10,922.1 million made up of non-oil imports of $8,686.2 million and oil imports of $2,235.9 million.

The Minister said the worsening of the trade balance as well as services and income accounts resulted in a wider current import account deficit of $2,700.5 million, equivalent to 8.6 per cent of GDP in 2010, compared to the deficit of $1,598.5 million, equivalent to 6.1 per cent of GDP in 2009.

He said the overall balance of payments registered a surplus of $1,462.7 million in 2010, up from a surplus of $1,158.8 million in 2009, driven mainly by improvements in the capital and financial accounts.

Mr Duffuor noted that as a result of the favourable balance of payments position, gross international reserves increased by $1.6 billion to $4.7 billion at the end of December 2010, translating on an average into 3.8 months of import cover for goods and services.

He said that the Ghana Cedi traded competitively in both the Interbank and Forex Bureau markets during the first nine months of 2010, with the cedi appreciating against the US Dollar, the Pound Sterling and the Euro.

However, in the last two months of 2010 the Cedi depreciated marginally against the US dollar.

Cumulatively, in 2010, the Ghana cedi appreciated by 2.02 per cent and 5.71 per cent against the pound sterling and euro respectively and depreciated by 3.09 per cent against the US dollar in the Inter-Bank Market.

In the Forex Bureau Market, the Ghana cedi appreciated by 1.16 per cent and 4.95 per cent against the pound sterling and the euro, respectively and depreciated by 1.02 per cent against the US dollar.

The Minister said monetary growth rates trended upwards during 2010, with broad money supply rising by 35 per cent in December 2010 compared to 26.9 per cent at end December 2009.

He said the growth was driven by increases in both the Net Foreign Assets (NFA) and Net Domestic Assets (NDA) of the banking system, recording growth rates of 23.2 per cent and 45.1 per cent, respectively.

Mr Duffuor said that demand deposits grew by 69.3 per cent and currency in circulation grew by 42.2 per cent compared to the respective contraction of 2.9 per cent and growth of 25.3 per cent in 2009.

Foreign currency deposits on the other hand recorded a marginal annual growth of 3.2 per cent in 2010, compared to 46.6 per cent in 2009, attributing this to the stability in the foreign exchange market.

Source: GNA