Mr. Speaker, I beg to move, that this honourable House adopts the Report of the Finance Committee on the Credit Agreement between the Republic of Ghana and the International Development Association (IDA) for an amount of ninety-seven million, four hundred thousand Special Drawing Rights (SDR 97,400,000) (US$140 million equivalent) for the Fourth Poverty Reduction Support Credit (PRSC 4).
1.0 Introduction
Mr. Spekaer, the Credit Agreement between the Republic of Ghana and the International Development Association (IDA) was laid in the House on Tuesday, 13th June 2006 and referred to the Finance Committee for consideration and report in accordance with the 1992 Constitution and the Standing Orders of the House.
To consider the agreement the Committee met with the Deputy Minister for Finance and Economic Planning, Prof. G. Gyan-Baffour and reports as follows:
2.0 Background
The Ghana Poverty Reduction Strategy is the culmination of a process, which commenced in July 2000, aimed at devising new and comprehensive policies to support economic growth and poverty
reduction in the country.
Due to this, the development framework was broken into phases.
The first was the Ghana Poverty Reduction Strategy I (GPRS I), spanning three years from 2002 to 2005. The emphasis of the GPRS I over the implementation period was to stabilise the economy and lay the foundation for a sustainable, accelerated and job-creating agro-based industrial growth.
The Ghana Poverty Reduction Strategy I is being succeeded by GPRS II spanning four years (2006-2009).
Having achieved relative macro-
economic stability, the direction of GPRS II is to accelerate economic growth and poverty reduction through private sector- led wealth-creation and employment generation. The areas of concentration of GPRS II are the following:
i) Continued macroeconomic stability;
ii) Accelerated private sector-led growth;
i i i ) V i g o r o u s h u m a n resources development;
i v ) G o o d g o v e r n a n c e a n d civic responsibility.
As hon. Members may be aware, the Poverty Reduction Strategy Component Four (PRSC-4) is the first in the second series of IDA credits in support of the implementation of the Ghana Growth and Poverty Reduction Strategy II (GPRS II),
2006-2009.
4.0 Terms of the Credit
Loan Amount -- 97.4 million SDR (equivalent
US$140 million)
Interest Rate -- IDA Standard
Service Charge -- three-fourths (¾ of 1 per cent)
per annum
Commitment Charge Rate -- one-half (½ of 1 per cent) per
annum
Grace Period -- 10 years
Repayment Period -- 40 years.
5.0 Observations
The Committee observed that the credit will be used to finance the 2006 Budget in two ways:
Firstly, the Bank of Ghana on behalf of the Government of Ghana shall use the foreign exchange to finance foreign expenditures and also shore up the country's foreign exchange reserves.
Secondly, the Bank of Ghana shall credit the Consolidated Fund with the cedi equivalent of the facility to finance local expenditures.
The Committee again observed that there was also an amount of US$15.0 million out of the total credit to support the Health Sector Programme.
The Committee was informed that to remove bottlenecks in the programme implementation, there will be a common reporting format as follows:
Quarterly reports on budgetary
expenditure with breakdowns by Ministries, Departments and Agencies with a lag of not more than eight weeks after end of each quarter.
Quarterly reports on domestically- financed poverty-related expen-ditures with a lag of not more than eight weeks after the end of each quarter. These reports would include a breakdown of main poverty-related expenditures programmes such as education, health etc. and a breakdown of items 1-4 of the Budget, that is, Personal Emoluments, Administration, Services and Investment.
Joint aide memoirs at the time of joint review missions on the PRSC/MDBS progress assessment framework, including a mid-term assessment on the progress on the PRSC Policy Matrix and figures jointly agreed not later than December 2006.
A report on progress on the PRSC-4 progress assessment framework and prior actions of the first quarter of 2006. In addition to the com-pletion of PRSC-4 prior actions would be assessed in the context of the GPRS II annual review that would document implementation and outcomes of its reforms.The Deputy Minister for Finance
and Economic Planning informed the Committee that in order to meet IDA requirements, Government would put a lot of emphasis on economic growth, incomes and employment in order to sustain adequate macro-economic performance.
The Committee was further informed that steps would be taken to reduce the share of teacher's vacancies in deprived districts and scale up health spending to accelerate progress toward the Millennium Development Goals (MDGs).
This would be done through:
Increase in budgetary allocation to the health sector;
Increase in the budget executing rate of total non-salary health budget and district level allocations.
The Committee observed that reports from Controller and Accountant-General's Department would be broadened to cover additional information on the execution of the Consolidated Fund, revenue and expenditure information on externally- financed projects and retained Internally- Generated Funds (IGFs).
The Committee observed that there will be strengthening in the management and control of the payroll system by having a new computerized payroll system online and fully operational with the advantage of giving MDAs access to salary payment reports on a monthly basis.
6.0 Conclusion
In view of the above, the Committee respectfully recommends to the House to adopt its report and approve by resolution, the Loan Agreement between the Republic of Ghana and the International Development Association (IDA) for an amount of ninety-seven million, four hundred thousand special Drawing Rights (SDR 97,400,000) (US$140 million equivalent) for the Fourth Poverty Reduction Support Credit (PRSC-4) in accordance with article 181 of the Constitution and section 7 of the Loans Act ,1970 (Act 335).
Respectfully submitted.
