Country Report 3Rd Quarter 1997 © the Economist Intelligence Unit Limited 1997
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COUNTRY REPORT Ghana 3rd quarter 1997 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. 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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 1997-98 8 Review 8 The political scene 12 The economy 16 Business and finance 18 Agriculture 18 Mining 20 Energy and infrastructure 20 Foreign trade and payments 22 Quarterly indicators and trade data List of tables 8 Forecast summary 13 Money supply and credit 14 Budget forecasts, 1997 16 Foreign reserves 17 Share price performance 19 AGC gold production, Jan-Jun 21 External debt 22 Quarterly indicators of economic activity 23 Foreign trade 23 Direction of trade List of figures 8 Gross domestic product 8 Real exchange rates 13 Consumer prices and money supply 21 Structure of external debt, 1996 EIU Country Report 3rd quarter 1997 © The Economist Intelligence Unit Limited 1997 Ghana 3 August 18, 1997 Summary 3rd quarter 1997 Outlook for 1997-98: The cabinet is finally nearing completion, but the new government has yet to show much dynamism. There is some doubt whether the government will be able to meet undertakings to donors, and there may be another large fiscal deficit this year. The IMF board is to vote in mid-September on the resumption of the ESAF. Real GDP growth will remain stable at around 5% in 1997 and 1998, but the government will not attain its year-end inflation target of 15%. Exports will be hit this year by the smaller cocoa crop and lower gold prices, and the current-account deficit is forecast to reach $405m, easing to $270m in 1998 as cocoa production and prices rebound. The political scene: The president has appointed a new mines and energy minister, and moved Mr Avoka again. Critics have argued that the new cabinet line-up violates the constitution. The Supreme Court has ruled against the NPP’s petition on ministerial vetting procedures, but the party has claimed victory and continued to disrupt parliament. The NPP has suffered internecine rows as contenders vie for the presidential candidacy in 2000. The government has begun to smooth the way for VAT with a new information campaign, but has failed to prepare the public for higher electricity tariffs. The coup in Sierra Leone has taxed Ghana’s foreign policy, with the government distancing itself from Nigeria’s military attack on Freetown. The economy: Year-on-year inflation has dropped again, and monetary expansion has slowed. An independent think-tank, the CEPA, has challenged government budget projections for 1997, forecasting a large deficit instead of a surplus. It has argued that the public-sector borrowing requirement will rise, putting expansionary pressure on the money supply. Business and finance: Trading volume on the GSE has surged, but price growth has remained moderate. Donors have projected a fall in foreign reserves. Sectoral trends: The government has set new producer prices for cocoa. Prospects for output in the 1997/98 season have remained uncertain. Gold production by AGC has risen, but output at Obuasi has fallen, although AGC’s hedging strategy has defied falling world prices. Gencor has sold a stake in Bogosu. AGC has courted Ivorian gas suppliers. A fire has put the Tema refinery out of action for months. Foreign trade and payments: Donors have highlighted medium-term financing requirements. External debt grew modestly last year. Editors: Gill Tudor All queries: Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 EIU Country Report 3rd quarter 1997 © The Economist Intelligence Unit Limited 1997 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 7, 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 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) Vice-president John Atta Mills Ministers confirmed as of Attorney-general & justice Obed Asamoah mid-May 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 Kwamena Ahwoi (acting) Health Eunice Brookman-Amissah Interior Nii Okaidja Adamafio Lands & forestry Cletus Avoka Mines & energy Fred Ohene Kena Parliamentary affairs Joseph Owusu-Acheampong Roads & transport Edward Salia Tourism Vida Amaadi Yeboah Trade & industries John Frank Abu Central bank chairman Kwabena Duffour EIU Country Report 3rd quarter 1997 © The Economist Intelligence Unit Limited 1997 Ghana 5 Economic structure Latest available figures Economic indicators 1992 1993 1994 1995a 1996a GDP at market prices C bn 3,009 3,949 5,108a 9,133 12,713 Real GDP growth % 3.6 4.8 3.6 4.5b 5.2b Consumer price inflation % 10.9 25.0 24.9 74.3c 34.0c Population m 15.96 16.45 17.11 17.69 18.30 Exports fobd $ m 986 1,064 1,236 1,431c 1,510c Imports fobd $ m 1,457 1,728 1,580 1,678c 1,823c Current account $ m –375 –558 –264 –143c –252c Reserves excl gold $ m 319.9 409.7 661.0 697.5c 828.7c Total external debt $ m 4,499 4,882 5,463 5,874c 5,137e External debt-service ratio, paid % 28.6 25.2 26.2 23.1c n/a Cocoa productionf ’000 tons 305 255 290 404b 340g Gold production m fine oz 1.1 1.4 1.5 1.6 1.6 Exchange rate (av) C:$ 437.1 649.1 956.7 1,200.4c 1,637.2c August 15, 1997 C2,192.50:$1 Origins of gross domestic product 1993 % of total Components of gross domestic product 1993 % of total Agriculture, forestry & fishing 47.6 Private consumption 89.7 Mining & industry 16.0 Government consumption 11.7 Manufacturing 8.5 Gross domestic investment 14.8 Services 36.4 Change in stocks 0.1 GDP at factor cost 100.0 Exports of goods & services 19.6 Imports of goods & services –35.8 GDP at market prices 100.0 Principal exports 1994a $ m Principal imports 1990 $ m Gold 549 Capital goods 544 Cocoa beans & products 305 Intermediate goods 356 Timber 165 Fuel & energy 210 Consumer goods 124 Main destinations of exports 1995h % of total Main origins of imports 1995h % of total UK 14 UK 17 Germany 11 Nigeria 16 USA 11 Germany 8 Togo 9 USA 7 a EIU estimates. b Provisional. c Actual. d Balance-of-payments basis. e Bank of Ghana figure, September. f Crop years beginning in October of calendar year. g EIU forecast. h Based on partners’ trade returns; subject to a wide margin of error. EIU Country Report 3rd quarter 1997 © The Economist Intelligence Unit Limited 1997 6 Ghana Outlook for 1997-98 The new cabinet nears Nine months into his new term of office, the president, Jerry Rawlings, and his completion National Democratic Congress (NDC) party have yet to show much of the dynamism and decisiveness normally expected of a government re-elected with a large mandate.