Finance

The Republic of Ghana has a Central Bank, the Bank of Ghana and the Commercial Banks, merchant banks, investment banks and development banks.

Some of these banks are the Standard Chartered Bank and Barclays Bank, the Merchant Bank, Prudential Bank, the SSB Bank, the National Investment Bank, and the Agric Development Bank.

Inflation has fallen from a high of 40.9 per cent in 2000 to 14.3 percent In 2002 and interest rates which in 2000 was 47 per cent is now 24.5 percent.

HIPC INITIATIVE

In 2001, due to depleted government coffers when a new government took over, the new government decided to go HIPC to enable it accrue some money for development without which it could not achieve much.

In March 2001 the Government of Ghana took a bold decision to take advantage of the Enhanced Highly Indebted Poor Countries (HIPC) initiative. That decision has already borne fruit in the past year. Once the eligibility of Ghana to apply for HIPC relief had been established, the government was able to suspend debt service payments to bilateral donors which brought budgetary savings of about US$190 million i.e. ¢1,368 billion in financial year (FY) 2001.

Out of the approximately US$100.0 million savings from the enhanced HIPC debt relief, government has decided to use US$20.0 million to reduce its domestic debt and the balance of US$80.0 million on poverty reducing programmes and activities.

For 2002, HIPC benefits consist of US$153.0 million in traditional debt relief and US$96.0 million from Enhanced HIPC debt relief.

Aside the banks are agencies, departments and organisations, which also deal with income and earnings.

Tax Departments
There are two main revenue collection services in the country. These are the Internal Revenue Service, which sees to the collection of direct taxes, including VAT and the Customs, Excise and Preventive Service, which sees to the collection of indirect taxes. For principal requirements in tax collection to improve, the operational efficiency of tax departments include:

· Assistance in the design of a modernized tax system.
· Assistance for improving operational methods of tax departments, including the Taxpayer Identification numbering project.
· Assistance in computerisation of the tax systems.
· Assistance to implement interfaces between tax departments.

Ministry of Private Sector Development (MPSD)
Seeing the need to coordinate and harmonize policy initiatives across various ministries and relevant agencies across the various regions in the country in order to make them effective in the support for the development of the private sector and while removing various bottlenecks that inhibit legal, financial and economic progress the government has established the MPSD.

To encourage the private sector and help them overcome financial bottlenecks, the government has set up special package financing schemes. Notable among them is the Export Development and Investment Fund (EDIF), the Ghana Investment Fund (GIF) and Loans Guaranteeing Scheme. EDIF provides financial resources to address problems associated with constraints in the exporting sector. GIF aims at providing loans to the small and medium scale enterprises at concessional rates. Export diversification activities are being pursued by the Export Promotion Council to prepare local businesses in meeting the standards and challenges of the global market.
The Ghana Investment Promotion Council (GIPC) has the mandate to set up one-stop shop for investors and to open regional offices with the goal to gather information about investment opportunities in the region in order to:
· Strengthen the private sector in an active way to ensure that it functions as the engine of growth and wealth creation for poverty reduction.
· Work with the private sector, both foreign and domestic as an effective development partner, provide impetus through the divestiture programme, provide financial support and streamline government bureaucracy so that we can create wealth at a faster rate in order to sustain poverty reduction in the country.
· While some of the activities and programmes of the five priority areas have been fully identified and funded in the 2002 Budget, through both HIPC and non-HIPC resources, not all the activities are fully funded.
· Consequently, in order for us to fully realise desired objectives, the Government intends to seek additional donor assistance. Towards that end, we have identified programmes and activities for which we are seeking donor funding in the amount of US$50.0 million. The total financing gap for 2002 is hence projected at about US$382 million.
OUTLOOK FOR 2003
The broad objectives of the medium-term framework are to promote private sector-led growth including small-scale business development, in a manner consistent with poverty reduction. Achieving these goals will require the achievement of macroeconomic stability. In the year 2003, it is expected that government will continue to tackle domestic imbalances by strengthening public financial management, improving monetary control, removing distortions in financial markets, and reducing the role of the state in the economy through divestiture of state enterprises.

The key macro indicators are expected to be modest. The real GDP growth is expected to rise to about 5 percent. Agricultural growth is expected to rise to about 5 percent and is expected to play a key role in achieving this objective. It is also expected that industry will experience accelerated growth with the implementation of the agro-processing initiatives proposed in the GPRS.