Inflation under control — Duffuor

Page 15, Feb 12, 2010
Story: Emmanuel Adu-Gyamerah

THE government has been able to bring under control the hitherto chronic imbalances in the country’s fiscal situation, which are the root causes of the persistent high inflation, the Minister of Finance and Economic Planning, Dr Kwabena Duffuor, has stated.
He said the fiscal adjustment undertaken thus far had permitted a significant reduction in the debt burden and reduced the risk on debts which had helped to restore confidence in the microeconomics policy.
Answering questions in Parliament, the Finance Minister stated that the success in that area meant that the government would no longer be competing with the private sector on the money market for credit, explaining that, consequently, businesses would no more be faced with the crowding-out effect of the money market.
The NPP Member of Parliament (MP) for Akim Swedru, Mr Joseph Ampomah Bosompem, had asked the minister about the practical measures the government was taking to stimulate productivity and economic growth.
The MP also enquired from the minister measures the ministry was putting in place to reinvigorate the private sector to absorb the teeming unemployed youth, given that there was a freeze on employment.
Those questions, among others, which were scheduled to be answered last week, were rescheduled for this week, since the Minority prevented a Deputy Minister of Finance, Mr Fifi Kwetey, from answering the questions on behalf of the sector minister.
Dr Duffuor explained that the government was aware of the fact that public policy setting played a vital role in the achievement of productivity, as it affected the environment in which firms operated.
“We believe that addressing market failures in the areas of infrastructure, innovation and human capital also provides an important avenue for productivity gains,” he said.
He said as a result of sound policies, stability had been achieved, while headline inflation was now moving downwards hitting 15.97 per cent as of December 2009, from 20.7 per cent around June 2009.
Dr Duffuor said the rapid depreciation of the cedi against the dollar had abated, adding that notwithstanding the pressures from the Christmas festivities in December last year, the cedi continued to appreciate against the dollar during the first month of this year.
He said that interest rate on the 182-day treasury bill dropped from 27.96 per cent as of December 4, 2009 to 19.4 per cent on February 5, 2010, while the one-year treasury note also recorded a downward movement from 25.5 per cent to 18.5 per cent within the same period.
Dr Duffour disclosed that the gross foreign reserves of the country had shot up to about $3 billion, which is equivalent to over 2.5 months of import cover for goods and services, as of the end of December 2009, compared with the $2 billion, equivalent to 1.7 months of import cover, recorded at the end of December 2008.
He gave assurance that the government would continue to develop and implement training programmes for key decision makers and policy formulators on the role of the private sector in the country.
On employment generation, he stated that in 2009 alone the government provided financial clearance for the employment of 26,529 new officers into the public sector.
Out of that number, he said, 14,206 were recruited into the educational sector, 11,714 for the health sector and 609 for the remaining ministries, departments and agencies (MDAs).
Also in the House to answer questions was the Minister of Food and Agriculture, Mr Kwesi Ahwoi.
The NPP MP for Asunafo South, Mr George Yaw Boakye, asked him why work on the Norbekaw Irrigation Project had come to a standstill.
Replying, the minister explained that the contract, which was terminated because the contractor could not meet the targets in May 2009, had been repackaged and put on tender for bidding by other contractors already on the field and working on some small farm irrigation projects.
Answering another question, Mr Ahwoi stated that the ministry would facilitate the establishment of block farms and agri-business, explaining that it was anticipated that 150,000 hectares of various crops would be cultivated to create jobs for about 450,000 youth.