COUNTRY REPORT Ghana Ghana: at a glance: 2001-02 OVERVIEW The new administration has established itself in power and will continue to push ahead with its efforts to return Ghana to macroeconomic stability and fiscal discipline. It will also intensify its investigation into alleged corruption and mismanagement during the Rawlings era. The National Democratic Congress (NDC) will spend the forecast period implementing the reforms recommended by its reorganisation committee. The economy is forecast to begin to recover in 2001: real GDP is forecast to grow by 3.5%, rising to 3.7% in 2002, and inflation will fall marginally. The current-account deficit is forecast at 4.6% of GDP in 2001 and 7.7% of GDP in 2002. Key changes from last month Political outlook • Tensions between the ruling New Patriotic Party and the opposition NDC have reached new heights, following the arrest of several members of the previous administration on charges arising out of the government’s anti- corruption investigations. The NDC has accused the government of carrying out a witch hunt. The decision by President Kufuor to abolish the June 4th national holiday, commemorating the coup that brought Jerry Rawlings to power, caused the ex-president to issue an angry statement, widely perceived as a threat of a new coup. The government reacted by ordering a search of ex-President Rawlings’s home, which raised tensions even higher. Economic policy outlook • The government held a National Economic Dialogue to discuss new policies and targets for Ghana’s economic development. • The government has pledged to carry out the recommendations coming from the forum. Economic forecast • Inflation is unlikely to fall as fast as originally forecast, owing to significant increases in fuel prices and utility charges. We expect annual average inflation rates of 35% in 2001 and 22% in 2002. July 2001 The Economist Intelligence Unit 15 Regent St, 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 our digital portfolio, where our 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. 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Ghana 1 Contents 3 Summary 4 Political structure 5 Economic structure 5 Annual indicators 6 Quarterly indicators 7 Outlook for 2001-02 7 Political outlook 8 Economic policy outlook 10 Economic forecast 12 The political scene 17 Economic policy 20 The domestic economy 20 Economic trends 22 Agriculture 23 Industry and mining 25 Infrastructure and other services 26 Financial and other services 28 Foreign trade and payments List of tables 10 International assumptions summary 11 Forecast summary 20 Composition of domestic debt 23 Receipts from cocoa beans and products 26 Ghana Stock Exchange, all share index 27 Ghana Stock Exchange, greatest increases in share prices, 2001 28 Inward direct investment List of figures 12 Gross domestic product 12 Real exchange rates 21 Exchange rate 23 Cocoa producer prices © The Economist Intelligence Unit Limited 2001 EIU Country Report July 2001 Ghana 3 Summary July 2001 Outlook for 2001-02 The New Patriotic Party (NPP) has established itself in power, having achieved its early goals of securing the loyalty of the military and embarking on its economic reform programme. Restoring macroeconomic stability and fiscal discipline are the focus of the programme. The government has published a bill establishing a National Reconciliation Commission to investigate the misdeeds of the Rawlings military regimes. Having published an interim budget in March, the government is currently working on a secondary budget statement, based on improved statistical data, which is expected in August 2001. GDP is forecast to grow by 3.5% in 2001 and 3.7% in 2002, led by the agricultural sector and continuing donor inflows. The depreciation of the currency has slowed, but it will continue to fall throughout the outlook period because of the depressed prices of Ghana’s main export commodities. The political scene Friction between the NPP government and the opposition National Democratic Congress (NDC) has continued to grow, following the arrest of numerous members of the Rawlings government on charges arising out of the government’s anti-corruption investigations into the previous administration. In addition, the decision by the president, John Kufuor, to abolish the June 4th national holiday, commemorating the coup which brought Jerry Rawlings to power, caused the ex-president to issue an angry statement, widely perceived as a threat of a new coup. The government’s reaction was to search ex-President Rawlings’s home, raising tensions even higher. The NDC maintains that the campaign is nothing but a witch hunt designed to deflect attention from the government’s own shortcomings. However, the government appears determined to continue the investigations. Economic policy The administration held a National Economic Dialogue in May to discuss targets and policies for Ghana’s economic development. The government has pledged to implement its policy recommendations. The domestic economy Despite falling slightly in the first part of the year, inflation has remained high owing to the large increases in fuel prices and utility charges. Electricity rates rose by 103% and water rates by 96% in May. It is expected that inflation will begin to fall at a faster rate during the outlook period as a result of forecast good harvests and the greater stability of the exchange rate . Foreign trade and payments In an effort to improve Ghana’s foreign-exchange reserves, private exporters of cocoa will have to change 98% of their foreign-exchange earnings into local currency during the 2001/02 season. Editors: John Arthur (editor); David Cowan (consulting editor) Editorial closing date: July 18th 2001 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected] Next report: Full schedule on www.eiu.com/schedule 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 2000 (presidential and parliamentary); next elections due December 2004 Head of state President, elected by universal suffrage for a maximum of two four-year terms; John Agyekum Kufuor was sworn in on January 7th 2001 for his first term. National government Cabinet, appointed by the president in January 2001. Main political parties New Patriotic Party (NPP), the ruling party; National Democratic Congress (NDC), the main opposition party; other parties include the People’s National Convention (PNC), the Convention People’s Party (CPP), United Ghana Movement (UGM) and National Reform Party President John Agyekum Kufuor Vice-president Alhaji Aliu Mahama Key ministers Attorney-general & justice Nana Akufo Addo Communications K. Owusu-Agyapong Defence Kwame Addo Kufuor Economic planning & regional integration Kwesi Nduom Education Christopher Ameyaw Akumfi Energy Albert Kan-Dapaah Environment, science & technology Dominic Fobih Finance Yaw Osafo-Maafo Food & agriculture Courage Quarshigah Foreign affairs Hackman Owusu Agyeman Health Richard W. Anane Interior Alhaji Malik Yakubu Alhassan Lands, forestry & mines Kweku Afriyie Local government Kwadwo Baah-Wiredu Manpower development & employment Cecilia Bannerman Parliamentary affairs J H Mensah Roads & transport K. Adjei-Darko Tourism Hawa Yakubu Trade & industries