The Monetary Policy Committee of the Bank of Ghana has undertaken a review of macroeconomic performance in 2002 and the outlook for inflation in 2003.

• The year 2002 ended with inflation at 15.2 percent, down from 21.3 per cent in December 2001, and up from 12.9 per cent in September 2002. The yearly average inflation has fallen from about 33.0 percent in December 2001 to 14.8 per cent by December 2002. The latest numbers show that after reaching a low of 12.9 per cent in September, inflation has gone up for the third consecutive month notwithstanding the bumper harvest reported in 2002. The cedi depreciated by 15.4 per cent in dollar terms during the year, against an annual inflation of some 15.2 per cent.

• Preliminary estimates indicate that the Government budget (excluding project-grant financed expenditures) ended the year 2002 with revenues of ¢10,735 billion, above budget target of ¢10,231 billion. Total Government expenditure for the year was ¢11,918 billion, above the end-year target of ¢11,101 billion. The excess government expenditure was largely on account of outlays on wages and salaries (for doctors, nurses and teachers) which exceeded the target by about 2.0 per cent of GDP.

The domestic primary balance at the end of 2002 was 2.1 percent of GDP, down from 3.8 per cent in 2001. The higher than programmed expenditure, combined with a shortfall in donor and divestiture receipts and an accelerated clearance of government arrears resulted in an increase Government borrowing to some 4.9 percent of GDP (¢2,331 billion) by the end of December 2002, compared with 2.3 percent of GDP in 2001. The borrowing was financed on the domestic money market in the form of Treasury Bills. Government borrowing from the banking system as a whole amounted to some 9.0 percent of government revenue, mostly from the Bank of Ghana.