at the end of December 2008, to less than 10 per cent at the end of December 2009. The chronic fiscal imbalances of the earlier years were the root cause of the persistent inflation. Bringing the fiscal deficit down or under control, was therefore, essential to the success of counter-inflationary policy and to the macroeconomic stability that we are currently enjoying.
The fiscal adjustment undertaken thus far has permitted a significant reduction in the debt burden, and reduced the risk premium on debts which has helped to restore confidence in the macroeconomic policy. Indeed, the success in this area means Government will no longer be competing with the private sector in the money market for credit. Consequently, businesses will no more be faced with the “crowding out” problem we have had in the past.
Madam Speaker, there has generally been a precipitous decline in interest rates on the auction market from December, 2009 to date, with the short-end of the money market recording the sharpest declines. The benchmark average interest rates on the 91-day Treasury Bills reduced from 24.9 per cent recorded on December 4, 2009 to around 17.8 per cent on February 5, this year. This is a clear indication that policies are working and the economy is entering into a cycle of declining interest rates. We expect the banks to take a cue from these favourable developments and adjust accordingly.
Similarly, interest rates on the 182- day Treasury Bill dropped from 27.96 per cent as at December 4, 2009 to 19.4 per cent on February 5, this year, while the 1-year Treasury Bill Note recorded a downward movement from 25.5 per cent as at December 4, 2009 to 18.5 per cent as at February 5, 2010. To the extent that
rates are falling, the private sector can now borrow at relatively low rates to improve upon their operations. This could lead to increases in profits and job creation, among others. Obviously, this will lead to increases in productivity and general economic growth.
Gross foreign reserves have shot up to about US$3 billion, equivalent to over 2.5 months of import cover for goods and services as at the end of December 2009, compared with the US$2.0 billion equivalent to 1.7 months of import cover recorded at the end of December 2008. This will further provide cushion or strengthen our cedi and enhance its competitiveness with a view to making Ghana attractive to foreign investors.
Madam Speaker, you would agree with me that the macroeconomic stability achieved so far, has brought about some certainty which will enable the private sector to plan. We have seen six successive months of sustained appreciation in the value of our domestic currency against the dollar. This is expected to have a calming effect on inflationary pressures in our economy.
Madam Speaker, as you are aware, Government believes infrastructure to be the physical capital that underpins all economic and social interactions. Accordingly, in the Budget and Economic Policy Document for 2010 which was read in November, 2009, various measures aimed at increasing productivity and economic growth were announced.
In the area of agriculture, Government has put in place, measures to improve productivity in the selected food security commodities, small remnants and fisheries subsector. Government is enhancing the
adoption of improved technologies by smallholder farmers, providing block farming for the adoption of technologies; and instituting the fertilizer subsidy programme this year. A Buffer Stock Management Agency is being constituted with the responsibility of holding food security buffer stocks and intervening in the markets to ensure that competitive prices are paid to farmers at all times.
A mechanization centre with full complement of equipment is being established in each of the remaining 90 districts in addition to the 80 already established. Individual farmers and agro- processors are also being assisted to own machinery/equipment nationwide.
Various policies have been put in place to support the efficient and effective management of the mining resources and to improve the capacity and operations of the mining sector.