The Minister of Finance, Development and Economic Planning, David Carew has said real GDP now stands to be projected to expand by 5.5%, as compared to the original target of 6%.
The Finance Minister recently read the budget in Parliament; an Act to authorize expenditure from the consolidated fund for the year 2009.
The Minister explained that the 2009 budget came at a time amidst the challenges of the global market. He stated that national inflation rose to18% in July before easing to 15% in October 2008; adding that the slow down in mining activities following the suspension of operations by Koidu Holdings, coupled with the collapse of the second dredge at Sierra Rutile mining site has dampened growth prospects of the economy.
As a result of that, he went on; real Gross Domestic Product (GDP) now stands to be projected to expand by 5.5% compared to the original target of 6%. “The above development coupled with the adverse external environment have also impacted negatively on our trade balance”
He stressed that total export amounted to $120.5Million during the first half of 2008, compared to $136.7Million in the corresponding period in 2007; whilst diamond export amounted to $65Million in the first half of 2008 compared to $83.8Million in the same period in 2007. “The 21% drop in diamond export is attributed to the suspension of operations by Koidu Holdings”.
Similarly, he continued, agricultural exports fell to $6.4Million in the first half of 2008; from $8.6Million in the same period of 2007 which have only accounted for only 5% of total export. Total value of import during the first half of 2008, the Minister said, has increased by 26.6% amounting to $276.6Million; compared to $218.4Million in 2007.
The gross foreign reserve, he disclosed, amounted to $211.4Million as of September 2008 and the nominal exchange rate remaining relatively stable whilst domestic revenue performance collected as of end of September 2008 was less than projected.
The total domestic revenue collected during January- September 2008 amounted to $492.7Billion compared to the targeted Le508.3Billion. “The shortfall of Le15.6 Billion is accounted for mainly by the under performance in mining revenues by Le8.9Billion, road user charge by Le 6.7Billion and revenues from NPA by Le7.6Billion and income taxes of Le7.5Billion” the Minister said.
David Carew pointed out that total expenditure and net lending for the 2008 financial year is estimated at Le1.26 Trillion or 21.5% of the GDP of which the current expenditure is amounted to Le910 Billion or 15.5% of GDP. The total request expenditure, wages and salaries amounted to Le340.2Billion or 5.8% of the GDP compared to the budgeted amount of Le356.2Billion.
The Minister intimated that to continue the pursuance of micro- economic stability, the implementation of prudent fiscal proactive monetary policy was needed as well as the acceleration of economic growth by scaling up investment in agriculture, infrastructure as well as improving the business climate, improve the basic services by pursuing public sector and public financial management reforms aimed at reducing poverty.
The Country’s external debt, the Minister revealed, stood at $599Million as of September 2008 and the bulk of the debt owned to external commercial creditors are accounted for about $254Million.
Le21.3 Billion was allocated to the Ministries of Agriculture and that of Energy and Power, which was last allocated Le77Billion is now allocated Le 45.5Billion. Health Ministry was accorded Le39.8Billion and Education Ministry the sum of Le40Billion. The Security Sector is allocated 40Billion with the Police, Prisons, Fire Force, Immigration and ONS allocated Le25.3, Le9.5, Le2.5, Le1.5 and Le1.4 Billion respectively.
The Finance Minister also announced the increase in salaries for government workers by 20%. By Ishmael Bayoh