Some minority Members of Parliament (MPs) have said the mid-year review of the budget statement and economic policy for the 2014 financial year presented by the Finance Minister was a clear manifestation of the current economic challenges in the country and did not deserve time for any reaction.
They said they were not surprised at the country�s debt stock and government�s inability to raise enough revenue to meet its expenditure because government�s measures were not working.
Deputy Minority Leader, Dominic Nitiwul declined to comment on the review statement presented on the floor of the House yesterday and explained that there was nothing new in the statement to deserve a comment.
MP for Mpohor, Alex Agyekum, said he expected the shortfalls in revenue and government�s inability to meet all the targets.
According to him, rising inflation and debt stock made the country unattractive for investors and added that the cost of living was going high due to the continuous increase in fuel and utility prices coupled with increase in transport fares.
Mr. Agyekum said government ought to introduce new measures to help arrest the continuous decline of the cedi and support export base of the country.
Presenting the mid-year review statement, the Finance Minister, Seth Terkper noted that preliminary data from January to May of the year indicate that, both revenue and expenditure were below their respective targets for the period.
�Since the shortfall in revenue was lower than the shortfall in expenditure, the resulting cash fiscal deficit was equivalent to 3.6 per cent of GDP, against a target of 3.5 per cent. This compares to a deficit equivalent to 4.0 per cent of GDP for the same period in 2013,� Mr. Terkper said.
He added that at the end of June 2014, the country�s Gross International Reserves stood at US$4,471 million sufficient to provide 2.5 months of imports cover compared to the stock position of US$5,632.15 million at the end of December 2013 which could cover 3.1 months of imports.
The Finance Minister noted that �this development partly reflects the seasonality in foreign exchange flows during the year.�
He said the country�s public debt stock is GH�62,861.72 million representing 54.8 per cent of Gross Domestic Product (GDP).
Minister for Finance, Seth Terkper said the �provisional public debt stock as at end-May 2014 stood at GH�62,861.72 million (US$21,661.52 million), representing 54.8 percent of GDP compared to the same period end-May 2013 of GH�38,593.77 million (US$19,977.11).�
Mr. Terkper noted that this is made up of GH�34,331.22 million (US$11,830.19 million) and GH�28,530.50 million (US$9,831.32 million) for external and domestic debt respectively.
Mr. Terkper stated that the country�s total external debt stock, amounted to GH�24,871.90 million (US$11,461.71 million) at the end of December 2013, and increased to GH�34,331.22 million (US$11,830.19 million) by end May 2014.
He added that �the high Ghana Cedi equivalent of the end-May figure is as a result of the depreciation of the Ghana Cedi. Total external debt as a percentage of GDP stood at 29.93 per cent at the end of May 2014, but in terms of its share of total public debt was 54.61 per cent.�
On domestic debt, the Finance Minister explained that total domestic debt stock, which stood at GH�27,254.00 million (US$12,559.45 million) in December 2013, increased to GH�28,530.50 million (US$ 9,831.32 million) by end-May 2014.
�The low US Dollar equivalent of the end-May figure is as a result of the depreciation of the Ghana Cedi. As a percentage of GDP, total domestic debt was 24.87 per cent at the end of May 2014, against 29.16 per cent at the end of December 2013,� he added.
On the Status of the China Development Bank (CDB) Loan Facility, Mr. Terkper stated that as at June 2014, three years after the Master Facility Agreement and other finance documents under the facility were signed, only two out of the twelve projects anticipated under the facility have been financed by CDB.
The Minister explained that the facility was to be disbursed under two tranches: A and B, of US$1,500 million each but noted that projects currently underway are tranche B facility projects.
He gave the status of the facility as at June 2014 are as follows: Tranche A, no activity; Tranche B: Total principal amount of the facility - US$3,000 million, total amount disbursed to date � US$597.3 million, total amount disbursed in 2014 � US$50.8 million and total number of projects underway � two; total amount of additional projects CDB has agreed to sign for � two (Coastal Fishing Landing Sites and AMA intelligent Traffic Management)
Mr. Terkper explained that the CDB has introduced a new condition precedent to the effectiveness of the subsidiary agreement for the two additional projects, namely a side agreement to amend some of the terms of the MFA, the Five Party Agreement and the Account Agreement.
According to him, the �Side Agreement is to primarily ensure that starting from the 10th shipment of crude oil to Unipec Asia, in support of the facility, GoG will transfer an amount equal to 49 per cent of the price of the shipment into the debt service account to ensure that GoG has sufficient funds to service the debts when principal repayments become effective in 2015; and the CDB facility is recognised as an oil-backed transaction contrary to the agreed position between CDB and GoG during the initiation of the transaction that the facility is not an oil-backed facility.�
He added that �Cabinet in June 2014 approved GoG�s capping of the facility at US$1,500 million to accommodate three additional projects. In addition, it also authorised the submission of the Side A agreement to Parliament for approval.�
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