The Monetary Policy Committee (MPC) has kept the prime rate unchanged at 18.5 per cent, citing the likely impact of the global financial crisis on trade and capital flows necessary to support economic activity. The prime rate is the key indicator of the direction of interest rate charged by banks. Addressing a press conference after the quarterly meeting of the Committee, Dr Paul Acquah, Chairman of the MPC, said the indicators of economic activity and demand growth, including imports seem to be slowing down from the rapid pace recorded in 2008. “Credit conditions are tighter. And, headline inflation though still high seem to be stabilising with reduced price volatility observed over the past few months, as has exchange rate volatility in the midst of sharp swings in international currencies,” he said. Dr Acquah, who is also the Governor of the Bank of Ghana, said a rigorous implementation of the budget would provide the necessary basis for a more stable macroeconomic conditions and improved outlook for growth and inflation. The 2009 budget focus is to reduce fiscal deficit from 14.9 per cent to 9.4 per cent in the first year. Dr Acquah said provisional banking data on fiscal operations during the first quarter of 2009 indicated that domestic revenue growth continued to be strong even though at a slower pace than in the same period in 2008. Similarly, expenditures were at relatively reduced pace. Total revenue and grants for the first quarter of 2009 amounted to GH¢1,308.1 million representing 6.1 percent of GDP, compared with GH¢1,129.2 million (6.4 percent of GDP) for the same period in 2008. In year on year terms, total revenue and grants increased by 15.8 percent, compared with 11.0 percent recorded in 2008. Grants amounted to GH¢244.3 million (1.1 percent of GDP) compared with GH¢225.5 million (1.3 percent of GDP) for the same period in 2008. He said total expenditure (excluding foreign financed capital expenditure) for the first quarter of 2009 amounted to GH¢1,249.2 million (5.8 percent of GDP) compared with GH¢1,265.3 million (7.2 percent of GDP) for the same period in 2008. Wages and salaries amounted to GH¢558.5 million (2.6 percent of GDP) compared with GH¢549.1 million (3.4 percent of GDP) for the same period in 2008. Dr Acquah said the fiscal operations during the first quarter resulted in a deficit (excluding foreign financed capital expenditure) of GH¢194.7 million (0.9 percent of GDP) compared with a deficit of GH¢275.6 million (1.6 percent of GDP) for the same period in 2008. The deficit of GH¢194.7 million, in addition to a foreign loan repayment of GH¢48.7 million, was financed from domestic sources to the tune of GH¢243.4 million (1.1 percent of GDP), he said. The stock of domestic debt (gross), which stood at GH¢4,778.1 million (27.1 percent of GDP) at the end of 2008, increased to GH¢5,083.5 million (23.7 percent of GDP) at the end of March 2009. External debt stood at US$4,010.2 million at the end of March 2009 (25.5 percent of GDP), up from US$3,982.6 million (28.1 percent of GDP) at the end 2008. This brings total public debt to US$7,742.4 million (49.2 percent of GDP), down from US$7,918.1 million (54.6 percent of GDP) in 2008.