Country Report 3Rd Quarter 1998 © the Economist Intelligence Unit Limited 1998
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COUNTRY REPORT Ghana 3rd quarter 1998 The Economist Intelligence Unit 15 Regent Street, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The EIU delivers its information in four ways: through subscription products ranging from newsletters to annual reference works; through specific research reports, whether for general release or for particular clients; through electronic publishing; and by organising conferences and roundtables. 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 15 Regent Street The Economist Building 25/F, Dah Sing Financial Centre London 111 West 57th Street 108 Gloucester Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.171) 830 1000 Tel: (1.212) 554 0600 Tel: (852) 2802 7288 Fax: (44.171) 499 9767 Fax: (1.212) 586 1181/2 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: http://www.eiu.com Electronic delivery EIU Electronic Publishing New York: Lou Celi or Lisa Hennessey Tel: (1.212) 554 0600 Fax: (1.212) 586 0248 London: Jeremy Eagle Tel: (44.171) 830 1183 Fax: (44.171) 830 1023 This publication is available on the following electronic and other media: Online databases Microfilm FT Profile (UK) NewsEdge Corporation (US) World Microfilms Publications (UK) Tel: (44.171) 825 8000 Tel: (1.781) 229 3000 Tel: (44.171) 266 2202 DIALOG (US) Tel: (1.415) 254 7000 CD-ROM LEXIS-NEXIS (US) The Dialog Corporation (US) Tel: (1.800) 227 4908 SilverPlatter (US) M.A.I.D/Profound (UK) Tel: (44.171) 930 6900 Copyright © 1998 The Economist Intelligence Unit Limited. 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ISSN 1350-7052 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Redhouse Press Ltd, Unit 151, Dartford Trade Park, Dartford, Kent DA1 1QB, UK Ghana 1 Contents 3 Summary 4 Political structure 5 Economic structure 6 Outlook for 1998-99 10 Review 10 The political scene 13 The economy and economic policy 16 Business and finance 17 Agriculture 20 Energy 22 Mining and industry 24 Aid, foreign trade and payments 25 Quarterly indicators and trade data List of tables 10 Forecast summary 14 Policy Framework Paper targets, 1997-2000 16 Brewery share prices (cedis) 18 Global cocoa production, 1998/99 forecasts 22 Mining, Jan-May 1998 23 Ashanti Goldfields output 24 International reserves 25 Quarterly indicators of economic activity 26 Foreign trade 26 Direction of trade List of figures 10 Gross domestic product 10 Real exchange rates 15 Inflation 23 Ashanti Goldfields Company: share price, 1998 EIU Country Report 3rd quarter 1998 © The Economist Intelligence Unit Limited 1998 Ghana 3 August 27th 1998 Summary 3rd quarter 1998 Outlook for 1998-99: The NDC will face a critical test as it tries to cope with leadership struggles and calls for democratic reform from the party’s rank and file. The NPP will meet in October to choose a new party leader, but divisions within the party will weaken its position. The energy crisis will continue to take a severe toll, reducing overall GDP growth to 1.5% in 1998. Inflation will continue to rise to an average annual rate of 27% for 1998 and 26% for 1999. The cedi, following months of real appreciation, is expected to depreciate sharply over the next 18 months. Exports will be only slightly down this year, as gold and cocoa output will remain strong, but imports are also forecast to jump, widening the current-account deficit to $627m in 1998. The political scene: President Rawlings has endorsed the vice-president as his successor, but grassroots NDC members have criticised the party leadership for not consulting them. The NPP has remained preoccupied with an internal cor- ruption investigation. Mr Rawlings has raised his international profile in hopes of a prestigious position after retirement. The economy and economic policy: A government policy paper outlines its new plan with the IMF and World Bank, which calls for fiscal discipline and deepening of reforms, but it appears overoptimistic. The Centre for Policy Analysis has released its annual macroeconomic review, questioning the government’s economic forecasts. Inflation has taken an upward turn, rising to a year-on-year rate of 23.1% in April, but money supply growth has slowed. Business and finance: COCOBOD and Ashanti Goldfields have invited bids for major corporate loans. Heineken has taken over Kumasi Brewery. The Gate- way project’s Tema Free Zone has moved ahead. The Bank of Ghana has criti- cised rural banks, and the SDCI financial fraud trial has started. Agriculture: The government has raised farmgate cocoa prices and promised farmers 60% of the world price by 2000 as domestic market liberalisation continues. External cocoa market liberalisation, however, remains on hold as concern over quality grows. The energy crisis has hit local cocoa processing, but the cotton and timber sectors have made modest progress. Energy: The energy shortages have continued as the government has struggled to provide emergency supplies. Several long-term energy contracts have been signed, but their co-ordination has been complicated by competing suppliers and slow government response. Mining and industry: Mining companies have reported strong production. Ashanti Goldfields has announced record output and higher earnings. Aid, trade and payments: Currency appreciation is threatening export competitiveness. Ghana’s reserves have remained firm, but low. Editor: Todd Moss All queries: Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 EIU Country Report 3rd quarter 1998 © The Economist Intelligence Unit Limited 1998 4 Ghana Political structure Official name Republic of Ghana Form of state Unitary republic Legal system A new constitution, based on the US model, was approved by referendum in April 1992 National legislature Parliament; 200 members elected by universal suffrage every four years National elections December 7th 1996 (presidential and legislative); next elections due in 2000 Head of state President, elected by universal suffrage for a maximum of two terms; currently Jerry Rawlings serving a second term National government Cabinet, partially appointed by the president in February-May 1997 Main political parties Progressive Alliance (PA), the ruling coalition, consisting of the National Democratic Congress (NDC, the majority party) and the Every Ghanaian Living Everywhere (EGLE) party. Opposition parties include: the New Patriotic Party (NPP); the People’s National Convention (PNC); the National Convention Party (NCP); the People’s Convention Party (PCP) President Jerry John Rawlings Vice-president John Atta Mills Key ministers Attorney general & justice Obed Asamoah Communications Ekwow Spio-Garbrah Defence Mahama Iddrisu Education Christine Amoako-Nuamah Employment & social welfare Mohammed Mumuni Finance Richard Kwame Peprah Food & agriculture Kwabena Adjei Foreign affairs Victor Gbeho Health Eunice Brookman-Amissah Interior Nii Okaidja Adamafio Lands & forestry Isaac Adjei-Mensah Mines & energy Fred Ohene Kena Parliamentary affairs Joseph Owusu-Acheampong Roads & transport Edward Salia Tourism Vida Amaadi Yeboah Trade & industries John Frank Abu Works & housing Cletus Avoka Youth & Sports Enoch Teye Mensah Ministers of state Daniel Ohene Agyekum without portfolio Margaret Clarke-Kwesie Ebenezer Kobina Fosu Alhaji Abdullai Salifu Mumuni Abundu Seidu Kofi Awoonor Central bank chairman Kwabena Duffour EIU Country Report 3rd quarter 1998 © The Economist Intelligence Unit Limited 1998 Ghana 5 Economic structure Latest available figures Economic indicators 1993 1994 1995 1996 1997a GDP at market prices (C bn) 3,674 4,950 7,417 10,422 14,006 Real GDP growth (%) 4.8 3.6 4.5 5.2 4.9 Consumer price inflation (av; %) 25.0 24.9 74.3 34.0 27.9 Population (m) 16.45 17.11 17.69 18.30 18.50 Exports fobb ($ m) 1,064 1,236 1,431 1,571 1,476 Imports fobb ($ m) 1,728 1,580 1,678 2,097 2,132 Current account ($ m) –558 –264 –144 –323 –436 Reserves excl gold ($ m) 409.7 583.9 697.5 828.7 598.8 Total external debt ($ m) 4,880 5,464 5,872 6,148 6,308c External debt-service ratio, paid (%) 20.7 22.9 21.4 24.5 28.3 Cocoa productiond (’000 tonnes) 255 290 404 340a 395 Gold production (m fine oz) 1.4 1.5 1.6 1.6 1.6 Exchange rate (av; C:$) 649.1 956.7 1,200.4 1,754 2,250.0c August 21st 1998 C2,325:$1 Origins of gross domestic product 1996 % of total Components of gross domestic product 1993 % of total Agriculture, forestry & fishing 40.6 Private consumption 89.7 Industry 14.2 Government consumption 11.7 Manufacturing 8.1 Gross domestic investment 14.8 Services 48.4 Change in stocks 0.1 GDP at factor cost 100.0e Exports of goods & services 19.6 Imports of goods & services –35.8 GDP at market prices 100.0 Principal exports 1996 $ m Principal imports 1990 $ m Gold 612 Capital goods 544 Cocoa beans & products 552 Intermediate goods 356 Timber 147 Fuel & energy 210 Consumer goods 124 Main destinations of exports 1996f % of total Main origins of imports 1996f % of total UK 16 UK 16 Togo 11 Nigeria 13 US 10 US 10 Germany 9 Germany 5 a EIU estimates.