Country Report 1St Quarter 2000 © the Economist Intelligence Unit Limited 2000
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COUNTRY REPORT Ghana The full publishing schedule for Country Reports is now available on our web site at http://www.eiu.com/schedule. 1st quarter 2000 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 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. 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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 5 Annual indicators 6 Quarterly indicators 7 Outlook for 2000-01 13 The political scene 16 Economic policy 20 The domestic economy 20 Economic trends 22 Agriculture 24 Mining 25 Financial services 26 Infrastructure and other services 27 Foreign trade and payments 28 Trade data List of tables 7 Forecast summary 17 Revised government macroeconomic estimates, 1999 20 Corruption perception index: African countries, 1999 22 Consumer prices 22 Ghana: cocoa production 23 World cocoa production forecast, 1999/2000 25 GSE: Ten largest shares by capitalisation—performance in 1999 29 Foreign trade 30 Direction of trade List of figures 12 Gross domestic product 12 Real exchange rates 18 Total donor pledges 21 Exchange rate 23 Cocoa prices 25 Gold prices EIU Country Report 1st quarter 2000 © The Economist Intelligence Unit Limited 2000 Ghana 3 January 17th 2000 Summary 1st quarter 2000 Outlook for 2000-01 The vice-president, John Atta Mills, remains the clear favourite as the NDC’s presidential candidate and has adopted a more aggressive stance against opposition parties as the 2000 election campaign starts to gather steam. But clear favourites to be vice-presidential candidates for either the NDC or the main opposition party, the NPP, have yet to emerge. The NDC candidate is likely to win the presidential election, and the party will retain its parlia- mentary majority. Fiscal policy will come under pressure, as weak cocoa and gold prices reduce government revenue and the government is tempted to keep expenditure promises in the run-up to the 2000 elections. GDP growth will remain relatively robust, recovering from the EIU’s estimated growth rate of 4.2% in 1999 (compared with the government’s 4.4%) to 5.2% in 2000 and 5% in 2001. Ghana will stick closely to its IMF adjustment programme and aid inflows will continue to help mitigate the worse impact of a negative external environment. The cedi will remain weak in 2000, falling by 26%, although the depreciation should slow to only 10% in 2001. The political scene A cabinet reshuffle in the run-up to the elections reflects the political fallout from the Ashanti crisis and the need to revamp the cabinet for the election campaign. Although the formation of a Joint Action Committee by the main opposition parties should increase co-ordination in fighting the elections, it only has a limited mandate. Economic policy and trends The government will present a bleak outlook for the economy in the run-up to the budget, although it has secured IMF and donor support for its policies, which will remain broadly unchanged. Monetary policy was tightened in the last quarter of 1999 to bring inflation back under control, and will be unchanged in 2000 in order to offset a marginally expansionary fiscal policy. With weak export earnings, a falling cedi and strong growth, the current- account deficit is estimated to reach 9% of GDP in 1999. The domestic economy • Rising cocoa production and a falling exchange rate will help to offset low international cocoa prices. The PBC is being privatised. • Ashanti Goldfield’s hedging crisis is gradually being resolved, but the poli- tical fallout is still apparent. However, its Geita operations may have to be sold. • PBC is listed on the GSE , but it fell by 42% in US dollar terms in 1999. • There may be a need for greater co-ordination of an increasing number of power projects that have been proposed since the 1998 power crisis. Foreign trade and Although eligible, Ghana is unlikely to apply for HIPC debt relief in 2000 for payments fear of damaging its links with some current bilateral lenders. Editor: David Cowan All queries: Tel: (44.20) 7830 1007 Fax: (44.20) 7830 1023 Next report: Our next Country Report will be published in April EIU Country Report 1st quarter 2000 © The Economist Intelligence Unit Limited 2000 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 four-year terms; currently Jerry John Rawlings, serving a second term National government Cabinet, partially appointed by the president in February-May 1997; major reshuffle in January 2000 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 Convention Party (CP); the People’s Convention Party (PCP); United Ghana Movement (UGM). The National Reform Party was formed in July 1999 by a breakaway faction of the NDC President Jerry John Rawlings Vice-president John Atta Mills Key ministers Attorney-General & justice Obed Asamoah Communications John Mahama Defence E K T Donkoh Education Ekwow Spio-Garbrah Employment & social welfare Mohammed Mumuni Environment, science & technology Cletus Avoka Finance Richard Kwame Peprah Food & Agriculture Joseph Owusu-Acheampong Foreign affairs Victor Gbeho Health Kwame Danso Boafa Interior Nii Okaidja Adamafio Lands & forestry Christine Amoako-Nuamah Local government Cecilia Johnson Mines & energy John Frank Abu Parliamentary affairs Kwabena Adjei Roads & transport Edward Salia Tourism Mike Gizo Trade & industries Dan Abodakpi Works & housing Issac Adjei-Mensah Youth & sports Enoch Teye Mensah Central bank governor Kwabena Duffour EIU Country Report 1st quarter 2000 © The Economist Intelligence Unit Limited 2000 Ghana 5 Economic structure Annual indicators 1994 1995 1996 1997 1998a GDP at market prices (C bn) 4,950 7,418 10,385 14,113 17,364b Real GDP growth (%) 3.6 4.5 5.2 4.2 4.6b Consumer price inflation (av; %) 24.9 74.3 34.0 27.9 19.4 Population (m) 16.86 17.34 17.83 18.34 18.75 Exports fobc ($ m) 1,238 1,431 1,571 1,490 1,813 Imports fobc ($ m) 1,580 1,678 1,937 2,128 2,563 Current-account balance ($ m) –255 –145 –324 –541 –350 Reserves excl gold ($ m) 583.9 697.5 828.7 508.0b 377.0 Total external debt ($ m) 5,464 5,872 6,202 5,982 6,057d External debt-service ratio, paid (%) 22.9 21.4 23.5 27.4 21.5d Cocoa productione (‘000 tonnes) 290 404 323 409 390 Gold production (m fine oz) 1.5 1.6 1.6 1.7 2.3 Exchange rate (av; C:$) 957 1,200 1,637 2,050 2,314 January 17th 2000 C3,410:$1 Origins of gross domestic product 1997 % of total Components of gross domestic product 1997 % of total Agriculture, forestry & fishing 36.6 Private consumption 80.0 Industry 25.4 Government consumption 12.4 Manufacturing 9.2 Gross domestic investment 23.6 Services 28.7 Exports of goods & services 19.8 GDP at factor cost 100.0f Imports of goods & services –36.5 GDP at market prices 100.0g Principal exports 1998 $ m Principal imports 1990 $ m Gold 682 Capital goods 544 Cocoa beans & products 621 Intermediate goods 356 Timber & products 172 Fuel & energy 210 Consumer goods 124 Main destinations of exports 1998h % of total Main origins of imports 1998h % of total Togo 12 Nigeria 14 UK 12 UK 12 Italy 11 Italy 9 Netherlands 8 US 7 US 7 Spain 6 a Actual.