afrol News, 19 February - Ghana's newly elected President John Atta Mills has promised a drastic reduction in budget for official state protocol spending to rescue the country's economy.

President Atta Mills in his first state of the nation address, said the government will cut on seminar and protocol related costs, including presidential jets after discovering that last year's expenditure has left the country broke.

The previous government has come under huge criticism for what has been perceived to be extravagant spending of state protocol. The previous government is also accused for over spending during the national celebrations just before the election.

President Atta Mills said overspending by his predecessor in the run-up to the polls had left the country broke. Official national statistics revealed that annual inflation rose to a five-year high at just under 20 percent in January.

The president said with the rising inflation, Ghana was facing a fiscal deficit close to 15 percent of gross domestic product. "National debt stood at more than US$7 billion while the Tema Oil Refinery and the Volta River Authority, two major parastatals, had debts worth $2 billion between them," he said.

He also warned that although Ghana's integration into the global financial system is shallow, Ghanaians may have to brace themselves for some shocks emanating from the credit crunch, saying reduced foreign aid and remittance flows to Ghanaians are sure repercussions of the crisis, demanding that local revenue mobilisation be strengthened.

The President said plans to revive the economy included building a new cocoa processing plant in the west of the world's second grower, which produces 680,000 tonnes per year and aims to boost output to 1 million tonnes by 2010 and 2011.

Rice production projects will also be revived with the aim of easing an annual $400 million bill for rice imports, the president said.

In January Ghanaians were angered by the last parliament's approval of lavish benefits for the outgoing president John Kufour, saying it would be too much a burden on the ailing national purse.

The package which gave each former president two furnished houses, six chauffeur-driven cars, a tax-free payment linked to time served in office, as well as money for entertainment and foreign travel, was revealed as the new government prepared to take full control.

By staff writer

© afrol News

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