Country Spent $1,646.1 Million On Oil Imports Last Year

GHANA'S TOTAL oil imports for 2006 increased significantly by 45.7 percent to US$1,646.1 million, above the US$1,129.4 million recorded in 2005, reflecting an increase in realised unit price and 2.3 percent increase in volume over 2005.

This led to the trade balance increasing from a deficit of US$2,543.14 million in 2005 to US$2,788.51 million in 2006.

The current account also recorded a deficit of US$810.2 million compared to US$773.4 million in 2005.

However, the overall balance recorded a surplus on the strength of debt cancellation, private capital flows, and unrequited transfers raising gross international reserves to US$2.05 billion at the end of February 2007.

These figures were released by the Monetary Policy Committee of the Bank of Ghana (BoG) in a press conference on Monday after a four-day review of the economy.

The Governor of BoG who doubles as the Chairman of the MPC said private inward transfers received by NGOs, embassies, service providers, individuals among others through the banks and finance companies for January to December 2006 amounted to US$5.78 billion, which represents 21.5 percent increase over those for 2005, which were in turn 58.3 percent increase over the transfers through banks and finance companies in 2004.

He said the foreign exchange market remained buoyant in 2006 with purchases and sales of foreign exchange by the banks and forex bureaux increasing by 16.6 percent over the 2005 level to US$6.8 billion.

"Cumulative purchases and sales for the first two months amounted to US$1,140.87 million, compared with US$1,086.43 million recorded for the same period in 2006," he said.

Developments in the nominal bilateral exchange rates of the cedi against the three major currencies - the US dollar, the pound sterling and the euro - showed that for January-February 2007, the cedi depreciated cumulatively against all three currencies by 0.2, 0.5 and 0.6 percent respectively. This compares with an appreciation of 0.01 percent against the US dollar and depreciation of 0.9 and 0.7 percent against the pound sterling and the euro respectively over the same period in 2006. The result was an effective depreciation of 0.2 percent in trade-weighted terms.

Provisional data on the execution of 2006 budget indicated that total revenue and grants amounted to ¢31,917.7 billion against an end year target of ¢34,135.4 billion representing a shortfall of 6.9 percent.

Total government expenditure for 2006, including the supplementary budget amounted to ¢39,828.6 billion, exceeding the budgetary ceiling by 2.4 percent.

The overall budgetary deficit for 2006 resulted in a net domestic financing of ¢4,765.2 billion (4.2 percent of GDP). The financing of this deficit caused a bounce in the public debt/GDP ratio from 10.8 per cent to 13.5 per cent; accompanied by a significant lengthening of the maturity structure of the stock of public domestic debt.

The fiscal deficit is explained mainly by revenue shortfalls and unrealised resources under the supplementary budget, which contributed about 3.7 percent of GDP to the total fiscal deficit. In addition, public sector wage settlements, which were about 13 percent in excess of programme, and unexpected transfers to manage the energy crisis overstretched the expenditure under the budget.

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