Government in the wake of the current global recession, coupled with the not too pleasant economic indicators has resolved to cut down on its expenditure by reducing state protocol budget and review exemptions regime.

He also indicated that there would be increase in efficiency in revenue collection and negotiation of the single spine wages and salaries regime to enable an early restoration of a stable macro-economy.

His Excellency, John Evans Atta Mills made these known when he delivered his first State of the Nation Address to parliament yesterday, in Accra.

He indicated that while the exact impact of the challenges on the world economic front on our economy are yet to be determined, it would be suicidal for government to bank on the previous arrangement, such as the generosity of donors for the nation's survival.

The President indicated, claims that Ghana's economy was solid in the face of crumbling world economy were not a factual fiscal fact of the state of the economy.

During the period under review (2008), he said "we have spent a great more than what we earned," stressing that the fiscal deficit or the excess of expenditure over revenue was GH ¢ 2.5 billion in 2008, which was over 15% of Gross Domestic Product (GDP).

He said the external deficit or Balance of Payment for 2008 was estimated at GH ¢ 3.42 billion or 18% of GDP, while the rate of inflation stood at 12.7 % at the end of 2007 and 18.1 % at the end of December 2008.

"Over the last few months, the cedi has lost substantial value with respect to the US dollar attributable to the delayed effect of excessive spending and trade imbalances that we have experienced in 2006," he said.

He said the cedi maintained its value for sometime because the government had used the foreign exchange resources which accrued from various debt relief arrangements to shore it up.

He added that "in recent times, however, as the foreign exchange inflows dried up, the cedi has come under enormous pressure," which according to him was negating the benefits from low crude oil prices which could otherwise have accrued to consumers.

President John Mills said in the space of two years (between 2006 and 2008) Ghana's stock of external debt increased from US$ 2.2 billion to US$ 3.9 billion causing an increase in the total national debt to US$ 7.6 billion in 2008 from US$ 5.3 billion in 2006.

"This is in spite of the over US$ 5.0 billion debt write off enjoyed by the nation from 2001," he said.

He indicated that as part of the efforts to remedy the ailing economy and create jobs for the citizenry, his government would partner the private sector and empower them to drive the economic growth of the country, adding that a vibrant, globally competitive private sector must play a key role in the economic transformation and social development of Ghana.

"My administration, therefore, sees the private sector as an active partner in our development. It is largely the private sector, formal and informal, indigenous and foreign, that will be central in creating jobs and increasing government revenue through taxation, which in turn will fund social investments such as roads, schools and clinics that the NDC Government is deeply committed to delivering."

The President reiterated his commitment to fostering a partnership built on a shared responsibility, where on one hand government will address challenges facing the private sector by providing the conditions necessary for the sector's growth, and on the other hand the private sector becomes proactive development partner and socially responsible and innovative so as to generate the needed growth and employment for the poor.

"We intend to build on the multi-sectoral strategic framework for the development of the private sector which should provide the vehicle for driving and delivering the changes so urgently required in making Ghana's private sector locally and globally competitive," he said.

Touching on Ghana's oil prospects, the President noted that in addition to establishing a regulatory framework for managing revenue, the Ghana National Petroleum Corporation (GNPC) will also focus on expense management for the Jubilee (the oil field) project to ensure that development costs are fair and reasonable.

He indicated that revenue from the oil and gas would be used to address challenges of poverty in Ghana through expenditures in priority areas of education, health, rural development, infrastructure, water and sanitation.

Other priorities, he said, included investment in physical and social infrastructure within communities close to the oil and gas production areas.

The Investment in a Future Generation Fund, according to him, would ensure sustained wellbeing into the long-term and investment in technical training, science, research and development.

The President further hinted that further intensification of the exploration in the years ahead would be achieved by GNPC's continuing active promotion of investment in the capital- intensive petroleum sector.

"In addition to the Tano-Cape Three Points basin, other sedimentary basins that GNPC will be encouraged to promote will include the onshore Voltaian basin which covers a large part of Ghana's surface area, but where very little exploration has been undertaken," he hinted.

On the Tema Oil Refinery (TOR), the President said the TOR debt stood at GH¢ 1146 million or 11.46 trillion old cedis.

The current debt profile at TOR, compared to a total debt of GH¢ 318.6 million or 3.18 trillion cedis as at December 31, 2000.

The current debt, he said, was as a result of unpaid debts on TOR's book interest, accumulated on the old debt and subsequent losses as a result of under-recovery from the ex-refinery pricing.

The TOR debt recovery Fund Levy, according to him, had as at December 31, 2008, accumulated to the tune of GH¢720 million or 7.2 trillion cedis. He said government would review the utilization of the fund.

President John Mills said the Volta River Authority (VRA) also has a total debt exceeding SU$ 800 million.

At the insistence of the of creditors, President John Mills said the VRA and Electricity Company of Ghana (ECG), the Ministry of Finance and Economic Planning (MFEP) had undertaken a Power Sector Financial Restructuring and Recovery Study.

The finding of which was to inform the development of a Comprehensive Financial Recovery plan for the power utilities that he said has still not been completed.

"Clearly, the current state of affairs is unsustainable and should not be allowed to continue," he said, adding that the Ministry of Energy would improve on the situation by developing and implementing comprehensive remedial measures, especially by recapitalizing to ensure the long term financial viability of the power utility.

President John Mills said Ghana's electricity generation was about 1800 MW, excluding the emergency power plants and would be increased according to him to at least 5000MW within the medium term, adding that the anticipated increase in the generation would be cost effective, to be able to meet national future requirements.

He said the generation of power would be fully opened to the private sector and public investors as independent power producers, restored to the National Democratic Congress (NDC) programme to progressively provide access to electricity, to all parts of the country, and pursued a regional cooperation and integration in the electricity supply as it was being developed within the West Africa Power Pool (WAPP).

On information Technology, he said government intended to bridge the digital divide between the rural and the urban communities to complement the promotion of attainment of the goals and objectives of the four thematic areas of the government.

"We also aim to improve telephone subscription in both fixed and mobile sectors to reach the rural and undeserved areas, encourage the development of common telecom facilities that will enable Telecom operators extend their services to more communities," he said.

He said, the government would accelerate programme for common transparent ICT platform to enhance government business and promote transparency and accountability.

Through the use of ICT, he said the government would build a reliable database on all government assets, especially on vehicles and landed properties, adding that telephone subscription in both the fixed and mobile sectors would be improved to reach rural and undeserved areas.

"We will encourage development of common telecom facilities that will enable Telecom Operators extend their services to many more communities," which according to him, would be achieved by encouraging co-location of facilities and mutual technical collaboration. Telecom providers would benefit from economies of scale and improve on communications penetration to rural areas within the next four years.

He concluded that GIFTEL would embark on a schools connectivity project so that many more schools would be provided with connectivity and ICT equipment, to enhance community and distance learning.

Correction

In the Wednesday edition of The Chronicle, we inadvertently published the name of H.E the Japanese Ambassador to Ghana as Keiichi Katami instead of Keiichi Katakami. Any inconvenience the oversight might have caused is deeply regretted. -Page Editor