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Country Report Country Report Ghana August 2008 Economist Intelligence Unit 26 Red Lion Square London WC1R 4HQ United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For 60 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where the latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 26 Red Lion Square The Economist Building 60/F, Central Plaza London 111 West 57th Street 18 Harbour Road WC1R 4HQ New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7576 8000 Tel: (1.212) 554 0600 Tel: (852) 2585 3888 Fax: (44.20) 7576 8500 Fax: (1.212) 586 0248 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: www.eiu.com Electronic delivery This publication can be viewed by subscribing online at www.store.eiu.com. Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office. Copyright © 2008 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author's and the publisher's ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it. ISSN 1350-7052 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK. Ghana 1 Ghana Executive summary 2 Highlights Outlook for 2008-09 3 Political outlook 4 Economic policy outlook 5 Economic forecast Monthly review: August 2008 9 The political scene 10 Economic policy 11 Economic performance Data and charts 15 Annual data and forecast 16 Quarterly data 17 Monthly data 18 Annual trends charts 19 Monthly trends charts Country snapshot 20 Political structure Editors: Christopher Eads (editor); Philip Walker (consulting editor) Editorial closing date: August 6th 2008 All queries: Tel: (44.20) 7576 8000 E-mail: [email protected] Next report: To request the latest schedule, e-mail [email protected] Monthly Report August 2008 www.eiu.com © The Economist Intelligence Unit Limited 2008 2 Ghana Executive summary Highlights August 2008 Outlook for 2008-09 • Ghana!s political scene will be dominated by the forthcoming presidential and legislative elections in December 2008. • The main opposition party, the National Democratic Congress (NDC), appears unified and focused on regaining the presidency at the 2008 election. • Real GDP growth is forecast to remain robust, at 6.3% in 2008 and 6% in 2009, as the mining sector continues to grow strongly. • Election-related spending and continuing high oil prices are expected to push average inflation to 16% in 2008, before lower domestic food prices and government spending help it to fall to 11.7% in 2009. • Robust growth of imports will continue to widen the trade gap, pushing the current-account deficit to 12.7% of GDP in 2008. Forecast slower growth of imports and strong current transfers in 2009 are expected to help the current- account deficit to narrow slightly to 12.3% of GDP. Monthly review • The Electoral Commission (EC) has reopened the voters! register for people who have turned eighteen and others who have yet to register. • Tsatsu Tsikata, a high-profile member of the NDC, has been found guilty of corruption in a controversial trial that has called the independence of the judiciary into question. • The IMF and other donors voiced concern over the widening fiscal deficit and rising inflation at a consultative group meeting in June. • In an attempt to reduce government consumption the government has announced a 50% cut in some of the programmed expenditure of Ministries, Departments and Agencies (MDAs) for the rest of 2008. • Higher expenditure and poorer revenue performance combined to widen the budget deficit to 3.8% of GDP for the first half of 2008, compared with 2% of GDP for the same period in 2007. • Year on year inflation reached 18.4% in June and shows little signs of slowing. Discouragingly, historical data show a similar inflationary trend taking place around the December 2000 elections when inflation exceeded 40%. • The Ghana Cocoa Board (Cocobod) has projected a total harvest of 700,000 tonnes for the full 2007/08 crop year (October-September). • In July the government announced a deal to sell 70% of Ghana Telecom to British company, Vodafone, for US$900m. Considerable opposition to the deal has been voiced by opposition and civil society groups. Monthly Report August 2008 www.eiu.com © The Economist Intelligence Unit Limited 2008 Ghana 3 Outlook for 2008-09 Political outlook Domestic politics Ghana!s political scene will continue to be dominated by the forthcoming presidential and legislative elections in December 2008. The New Patriotic Party (NPP) government led by the president, John Agyekum Kufuor, will face increasing internal tensions for the remainder of this year, as evidenced by the establishment of a new party, the Reformed Patriotic Democrats (RPD), formed by breakaway members of the NPP. The NPP!s presidential candidate, Nana Akufo-Addo, will face the increasingly difficult task of ensuring that the NPP remains united, as the RPD threatens to weaken the NPP in its heartland region of Ashanti. Mr Akufo-Addo is a member of the Akyem tribe, and many in the NPP felt that the presidential candidacy should have gone to Alan Kyerematen, an Ashanti, who was the runner-up in the contest to nominate the NPP!s presidential candidate. Tensions were highlighted by the brief resignation of Mr Kyerematen in early May, before the NPP was able to woo him back. As a result, the unity of the NPP will remain in some doubt throughout the election process, although the Economist Intelligence Unit does not expect a major implosion of the party. The main opposition party, the National Democratic Congress (NDC), remains united behind its presidential candidate, John Atta Mills. The apparent unity within the NDC is a relatively new development and indicates an awareness of the importance of public perceptions of the party that may presage a more media-savvy campaign than in previous elections. However, it is unclear whether the 62-year-old Mr Mills can beat the NPP!s candidate in 2008. Although undoubtedly capable, Mr Mills does not represent the break with the past and the fresh start that many argue is needed to extend the NDC!s appeal beyond its traditional core voters. As a former vice-president of an NDC government, he is linked to an administration that has been accused of human- rights abuses and economic mismanagement. Mr Mills!s record is further blemished by two previous presidential election defeats in 2000 and 2004. Ghana!s political atmosphere is set to become more bellicose as the elections approach. The NDC has been combative towards the government in recent months and is likely to become more so as the elections draw nearer. The NDC!s popularity is expected to remain strong, particularly in the north and east. We expect that the 2008 vote will be close, testing Ghana!s young democratic institutions. Although Ghana has a relatively good recent record of political stability, several factors may raise the possibility of civil disobedience in 2009, following the polls. These include the NDC!s determination to gain power after eight years in opposition and its deep-seated distrust of the NPP; overlapping tribal, regional and party divisions; and the likely closeness of the election results. International relations Ghana will remain a strong proponent of the New Partnership for Africa!s Development (Nepad) and is supportive of its underlying principles, such as Monthly Report August 2008 www.eiu.com © The Economist Intelligence Unit Limited 2008 4 Ghana good governance and the process of peer review. Mr Kufuor will maintain good relations with Ghana!s major trading partners and donors, especially the US and the UK, which have traditionally been the closest because of their large Ghanaian diasporas. No significant changes to foreign policy are expected, regardless of who wins the 2008 elections. However, the recent development of links with China, backed by concessional Chinese funding for infrastructure projects, has led to some shift of emphasis in Ghana!s international relations. Economic policy outlook Policy trends When presenting the 2008 budget in November 2007, the government reconfirmed that it would sign up to the IMF!s policy support instrument (PSI), in which no financial support is given but policy implementation is closely monitored. We do not expect economic policy to change significantly over the forecast period. The government will continue to seek to improve the management of public expenditure, increase revenue to boost government capacity, improve the business environment by lowering taxes, and extend credit and support for the private sector. However, although the poverty reduction and growth facility (PRGF) expired in October 2006, there has been no progress on agreeing a PSI.
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