politics should not dictate spending n

Last Thursday, Parliament approved a total of GHc 1,463,123,559.00 as supplementary budget for the 2011 financial year.Among areas earmarked to benefit from the supplementary allocations, as stated by Dr. Kwabena Duffuor, Minister of Finance and Economic Planning, include the creation of jobs and employment opportunities for the youth, provision of crucial economic and social infrastructure and improvement in sanitation.He said developments in both the domestic and global environment had necessitated some variations in the assumptions underlying the 2011 Budget Statement and Economic Policy presented to the House in November, 2010.The developments, he said, include the passage and implementation of the Petroleum Revenue Management Act, 2011, Act 815, coupled with changes in world crude oil prices and revised oil production levels; disbursement of World Bank budget support for 2010 in February 2011; receipt of proceeds from the sale of shares in AngloGold Ashanti issued in lieu of royalty payments. While some have expressed worry about government's decision to spend the additional revenue, arguing that it could have negative effects on the economy, particularly in a year preceding a general election, Mr. George Osei-Bimpeh of SEND Ghana, has said it may not be so, since we are not going to create any huge budget deficit by going outside to borrow. Instead, he said what may be worrying is when allocation to the social services is guided by political inclinations rather than needs and wants. "It is important for us to talk about the areas where we are going to use the extra revenue. I want to caution that if there are intentions to use it for provision of social services, then the very poor should be targeted so they can stand on their feet in the emerging market place." Meanwhile, in a reaction to the presentation of the government's supplementary budget, the Executive Director of ISODEC, Bishop Akolgo, has commended government for submitting a midyear report on how they have used resources including how they have respected the Petroleum Revenue Management Law. In an interview, he suggested that the supplementary budget should be directed at targeted interventions in the national economy and that the extra revenue from the oil must be applied to transform and diversify the economy. "The 70% of the oil money should be spent on targeted interventions. Those that can give return so we can move the economy forward. We must diversify from the three traditional commodities timber, gold and cocoa."He proposed an open debate to discuss where the annual budget funding amount of 70% of total petroleum receipts should be spent. Ghana, he said, could set the pace in democratising decisions around petroleum revenue expenditures. He challenged citizens to mount surveillance and monitor projects in the face of the rather high cost of projects, "else we can get billions of dollars from Jubilee field but burn away on expensive projects.""It will require citizen's vigilance since the establishment of the Revenue Management Act marks the beginning of a social contract between government and citizens, so it is important for citizens to play their part."On the implications of the supplementary budget on next year's electioneering campaign, he said all and sundry must be on the lookout for campaign expenditures so that public funds will not be unduly spent on party activities. According to Bishop Akolgo, Ghana is uniquely endowed with significant amounts of valuable natural resources among few select nations where oil and gas have been discovered together with endowments of gold, diamond, salt, bauxite, limestone, iron ore and manganese. He said these natural resources create the opportunity for a gold refinery and industrial complexes embracing aluminium, petrochemicals, fertilizer, iron and ferro-manganese production, and value-added industrial and consumer products linked to the outputs from these basic industrial goods."The transformational opportunity is presented for government to take a strategic view of the development prospects available from the linked endowments in oil and gas, bauxite, salt and limestone, as well as iron ore and manganese."Some highlights of the Mid-Year Review of the 2011 Budget Statement and Economic Policy, as well as Supplementary Estimates of the Government of Ghana for the 2011 Financial Year are as follows:Macroeconomic Developments for January - May, 2011- GDP on year-on-year basis for the first quarter of 2011 showed a 23 percent growth over that of the same period in 2010. Provisional quarter-on-quarter estimates of the real GDP showed a growth of 21.4 percent and 5.3 percent in the industry and services sectors respectively. - Revisions to the 2011 Fiscal Estimates and Macroeconomic Targets and Request for Supplementary Estimates- At the end of May 2011, Gross International Reserves improved to US$4.7 billion, representing 3.7 months of import cover of goods and services. - Developments in the foreign exchange market show that the Cedi cumulatively depreciated by 2.2 per cent against the US Dollar during the first half of 2011.- Road contractors, Statutory Funds and SOEs. Additionally, GHc891.3 million in bonds have been issued to creditors as part of the liquidation strategy. With these payments, government liabilities in respect of GETFund, DACF and NHIF as at the end of December 2010 have been fully settled. The outstanding balance of GHc1.7 billion will also be managed either through cash payments or securitization. Local Enterprises and Skills Development Programme (LESDEP) In furtherance of the job creation agenda, a new youth employment programme, known as the Local Enterprises and Skills Development Programme (LESDEP), has been commissioned by His Excellency, President John Evans Atta Mills, and is aimed at empowering the youth through the acquisition of skills supported by equipment and machinery.The programme has already been inaugurated in the Northern, Western, Central and Eastern Regions.Biometric Registration for 2012 Election- To advance the course of democracy through transparent, free and fair elections, government has released GHc50.0 million to the Electoral Commission to implement activities preceding the 2012 Presidential and Parliamentary elections. Savannah Accelerated Development Authority (SADA)- Government has released an amount of GHc8 million out an allocation of GHc25 million for the 2011 fiscal year. Government will release the rest of the funds to SADA to ensure a speedy- clearance of arrears and commitments from previous years; and - exchange rate developments.- With the passage of the Petroleum Revenue Management Act (PRMA), there is the need to implement the provisions in the Act. Key provisions in the PRMA that have direct implications for the fiscal framework include the following:- estimation of the Benchmark Revenue; - determination of the Annual Budget Funding Amount (ABFA); and - determination of transfers to the Ghana Petroleum Funds.- In line with section 21(5) of the Petroleum Revenue Management Act, Act 815, the oil revenue would be spent in the following GSGDA priority areas;- expenditure and amortisation of loans for oil and gas infrastructure;- road infrastructure;- agricultural modernisation; and- capacity building (including oil and gas).-Revisions have been made to the fiscal and macroeconomic framework to reflect these changes. The revised macroeconomic targets for the 2011 budget are as follows:- Real GDP growth (excluding oil) of 7.5 percent ;- Real GDP growth (including oil) of 14.4 percent ;- Overall fiscal deficit revised from 4.1 percent to 5.1 percent of GDP;- Average inflation rate revised from 8.8 percent to 8.7 percent;- End-period inflation rate revised from 8.5 percent to 9.0 percent; and Gross international reserves of not less than three months of import cover of goods and services.Outlook for the Rest of the YearDevelopments in the first five months of 2011 point to an optimistic outlook for the rest of the year. Going forward, we are determined to strictly enforce the budget plans for the rest of the year inspite of the fiscal challenges, resulting from h domestic and external developments. Based on trends for the first five months of 2011, the tax collection targets are likely to be exceeded and steps that have been taken to address the problem of expenditure arrears will help in strengthening banks' balance sheets, contributing to improved credit to the private sector.We expect a further reduction in inflation and increased GDP growth in 2011. Effective collaboration and coordination of - our fiscal and monetary policies will be used to dampen any exogenous shocks to ensure a favourable budget outturn for 2011.