GH Third Poverty Reduction Support Credit

PROMOTING GROWTH, INCOME AND EMPLOYMENT Progress made under the program for growth and employment generation supported by PRSC-3 has been broadly satisfactory, with prudent management of fiscal accounts providing scope for debt reduction, while new government programs for the development of the private sector, agriculture and natural resources management provided guidance to the implementation of the GPRS. Specific actions included the following: * Reducing public domestic debt to increase the credit available to the private sector. Although fiscal developments in 2004, in particular the need to accommodate the increase in oil prices in international markets, meant a slightly higher overall fiscal deficit than planned, faster real GDP growth allowed the targeted reduction in the domestic debt to be met, with the domestic debt to GDP ratio declining to 15 percent by end-2004, down from 19 percent at end-2003. Lower levels of domestic public debt and declining inflation allowed, in turn, for nominal interest rates treasury bills to ease to an average of 19 percent in 2004, down from 26 percent in 2003. Increased availability of credit to the private sector followed suit, and is estimated to have increased by 33 percent in 2004, reaching 55 percent of domestic credit, up from 52 percent at end-2003. * Diversifying the financial sector, with several actions completed in the implementation of the FINSSIP. The Long Term Savings Bill was approved by Parliament on October 28, 2004, deepening the savings mobilization for old age and housing. There were also improvements in the administrative framework for micro-finance, with establishment of an interim committee for the micro-finance center composed of a four member technical committee, which, in consultation with stakeholder beneficiaries, is coordinating the micro-finance services in the country. Actions are now needed to nominate the members of the Board, so as to formally establish a single entry point for Micro Finance coordination within Government. Another action related to micro-finance was the publication of a list of all current Government programs in this area, which is being followed up by a census of other interventions being undertaken by private sector and NGOs, making the report more complete. Finally, the operations of the Central Settlement and Depository System (CSDS) for government securities commenced in November 2004 at the Bank of Ghana, with the set up of the site linkages and the registration of the CSDS as a company. Still pending, however, is the Parliamentary approval of the CSD Bill, which will provide the necessary legal backing to the operations of the CSDS. The aim is to record all security transactions in electronic form, increasing the liquidity and reducing the costs of transactions in government securities, especially for small investors. * Continuing the implementation of the power sector reform, with additional efforts made in restructuring the energy sector to encourage efficiency and the quality of service delivery. The automatic mechanism for adjusting energy tariffs remained operational, although no adjustments were required because of the shift in the electricity generation mix toward less expensive hydroelectric sources.Progress was also made in commencing the implementation of a five-year performance-based ECG Management Support Services Agreements (MSSAs), with the issuance of the Request for Proposals (RfP) to the qualified bidders on June 9, 2005, setting a July 19 deadline for receiving technical and financial proposals. Also, progress was made in continuing the process of transforming the Volta River Authority (VRA) into two separate companies (the distribution and the generations companies), and the establishment of an independent transmission company, with the VRA Amendments act approved by Parliament on July 22, 2004. In the meantime, VRA?s Assets Revaluation was completed, and consultants were engaged to separate the books of accounts. * Removing administrative and regulatory barriers for private sector development, with actions being taken on five fronts. First, steps have been taken to strengthen the institutional framework to implement the PSD strategy with the PSD oversight committee constituted in November 2004, with authority to coordinate across ministries. The institutional review was completed and recommendations issued in July 2005. These will be followed by Oversight Committee consultations and presentation of major recommendations to the Cabinet. Second, the trade policy was approved by Cabinet in October 2004, formally launched in February 2005, and the work of the Trade Sector Support Program commenced. Third, the establishment of four land deed registries outside Accra has proceeded as scheduled, with adverts issued for the inauguration of the registries in Sekondi and Sunyani on May 20 and 23, and in Koforidua and Tamale on June 13 and 15. The new deed registries should allow greater security in land transactions and the increase ability to post deed certificates as loan collaterals. Fourth, the operations of GCnet have begun at Aflao, with the submission and processing of declarations having started already in September 2004. The connection at Elubo has been fully prepared but is not operational yet due to technical problems with the connection provided by Ghana Telecom. Fifth, the automation of Registrar-General?s Department (RGD) has proceeded as scheduled, with the hardware, networking infrastructure and software installation completed. * Improving the performance of the rural sector in the interest of the rural poor, with the Ministry of Food and Agriculture (MOFA) continuing to implement the activities programmed under its strategic plan. The process of revising the Food and Agriculture Sector Development Plan (FASDEP) has continued, with a multi-disciplinary committee identifying the poverty?focused elements recommended in the recently completed Policy and Social Impact Analysis (PSIA) on the economic transformation of the agricultural sector. In aiming at raising the efficiency in the delivery of extension services, the regional research liaison committees are now operational in all the ten regions of the country. Planning sessions have been completed in all regions. District planning sessions have also been held in all the Districts to gather demand driven research proposals. Regional review meetings will examine proposals from prioritized rechargeable problems and approve of proposals for funding by the Competitive Agricultural Research Grant Scheme (CARGS). In tandem, with the approval of the Ministry of Finance and Economic Planning, MOFA has commenced the process of recruiting the 250 Agriculture Extension Advisors (AEAs) and 50 agriculture graduates annually over the next five years. This recruitment aims at helping to raise the Extension Agent-Farmers? ratio from the current level of 1:1400 to 1:1000. Finally, to revitalize the Policy, Planning, Monitoring and Evaluation process within MOFA, a new policy process is being rolled out. A presentation of the proposal has been made to staff of MoFA and followed up by orientation courses. Also, the review of MOFA?s Decentralization Program is ongoing, with a draft handbook on roles and responsibilities of MOFA staff positions already prepared. * Strengthening forestry resource management, with the continuation of the plantation development program, the transparent and competitive allocation of timber rights, and the establishment of a framework for log tracking in Ghana. The plantation development program consists of four plantation programs aimed at expanding the country?s forest cover to 80,000 hectares by 2007 (up from 20,000 hectares in 2002). These plantation programs are (i) the 20,000 hectare Modified Taungya Program supported by the National Plantation Development Fund; (ii) 2,000 hectare Community Plantation Developme