Country Report 3Rd Quarter 1997 © the Economist Intelligence Unit Limited 1997

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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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

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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.

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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. The president and his advisers spent much of the first six months reconciling the demands of the NDC’s regional and personal factions competing for senior cabinet posts, and announced an (almost) complete government list on May 31. Deals cut in the process suggest that in contrast to 1992, when elected members of parliament (MPs) lacked experience and NDC MPs won their seats automatically because of the opposition boycott, the president is having to pay greater heed to regional agendas articulated through the parliamentary party. He now faces the task of reconciling such pressures with undertakings to donors, who are still awaiting firm evidence of progress on repairing the fiscal damage caused during last year’s pre-election splurge.

Two steps forward, and So far the government has taken two political steps forward and one back. On one back the positive side, it has retired the governor of the Bank of Ghana (BoG, the central bank) since the 1980s, Godfried Agama, a move welcomed by some analysts who thought he was too open to political pressure. The government has also commissioned a special education campaign to prepare the public for the reintroduction of value-added tax (VAT) early next year. If the plan is successful, the kind of abuses and misinformation that provoked riots against the abortive introduction of VAT in 1995 should be avoided. However, the government has yet to prove its competence in preparing the public for painful tariff increases. In June it announced a major rise in electricity prices, offered several conflicting explanations for the rates and then suspended the increase at the end of July after a public outcry from industrialists, trade unions and consumers.

More action will be On the economic front, the government has made some progress in meeting its needed to satisfy donors side of a deal with the IMF, whose endorsement is necessary to secure adequate financing pledges for 1998-99 from the biennial donor consultative group, due to meet in November. It has secured a modest minimum wage deal with workers and returned to using money supply as the main anchor against inflation. Monetary expansion slowed to 5% during the first quarter of the year, from 11% the previous quarter. However, the government has still to tackle some trickier undertakings to ensure IMF endorsement. It has yet to convince donors of its commitment to controlling public expenditure, and also faces the task of forcing the Ghana National Petroleum Corporation (GNPC) to repay outstanding loans to the BoG, Accra sources say.

The government will Inflation continued to slow during the first four months of 1997, with the overshoot the inflation year-on-year rise in the consumer price index dropping to 29.1% at the end of target— April. However, with seasonal factors appearing set to drive up food prices—the month-on-month rate accelerated to 3.4% in April from 2.8% in March— and cedi depreciation continuing, the government appears highly unlikely to meet its year-end target of 15% inflation. The EIU continues to forecast average inflation of 32% in 1997, easing slightly to 27% in 1998.

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—and some forecast On the fiscal side, there is little evidence so far to determine whether or not the another large fiscal government is managing to curb public spending, as pledged in the 1997 deficit— budget. The Accra-based independent think-tank, the Centre for Policy Analysis (CEPA), whose fiscal forecasts last year proved more accurate than the government’s, argues that overspending will continue, and that last year’s budget deficit (recently recalculated and revised substantially upwards) will make it extremely difficult to deliver the projected surplus of C191bn ($89.7m). The CEPA forecasts instead a huge C550bn deficit.

—but hard-currency needs We believe that the government’s increasingly acute need for donor cash will should strengthen official focus its attention on improving fiscal management. Recent donor estimates resolve suggest that import cover, which stood at 3.8 months at the outset of 1996, has dwindled to around 2.7 months and appears likely to remain at this level through 1998. With prices for gold, Ghana’s main foreign exchange earner, plummeting below $320/oz in July, and a small 1996/97 cocoa crop likely to deliver lower earnings than usual, the government needs all the help it can get to shore up this year’s financing gap and avoid the kind of deterioration in lenders’ risk perception that could drive up the cost of foreign commercial borrowing.

Growth prospects remain Although last year’s real GDP growth of 5.2% was the fastest annual increase moderate— since 1991, the rate is unlikely to be pushed any higher during the forecast period. The weaker cocoa crop in the current 1996/97 (October-September) season is likely to be offset by a good food harvest, but gold output at Ghana’s premier producer, Ashanti Goldfields Corporation (AGC), is not increasing as quickly as the company had previously predicted, and overall real GDP growth is forecast to level off at 5% a year in 1997 and 1998.

—and lower gold prices Ghana’s export earnings are expected to fall fractionally in 1997, to $1.5bn, will weigh on export owing to a combination of lower cocoa production and weaker gold prices. We earnings now project that gold exports will yield around $530m this year, based on an anticipated average price of $330/oz and production of 1.6m oz, while cocoa is forecast to deliver around $500m, although this drop will be partly offset by continued growth in non-traditional export earnings. Depreciation of the cedi, which is forecast to weaken to an average of C2,130:$1 this year and C2,660:$1 in 1998, will contain import demand to some extent, but we nevertheless project a wider trade gap this year and a current-account deficit of some $405m. Gold fundamentals appear even more bearish than three months ago; there is every chance that prices, which fell below $320/oz in July, could stay there for another year, prompting some mines to cut output and investment plans. If output remains at current levels, gold is projected to yield around $510m next year. However, our outlook for 1998 assumes that cocoa output will recover to around 370,000 tons during the 1997/98 season, and that prices will average around 79 cents/lb ($1,452/ton), some 14% higher than in 1996/97. Assuming that the government sold some of the crop forward during the second quarter of 1997 to take advantage of the more bullish futures prices then prevailing, earnings for 1998 could approach $650m, helping to cut the current-account deficit back to around $270m next year.

EIU Country Report 3rd quarter 1997 © The Economist Intelligence Unit Limited 1997 8 Ghana

Forecast summary ($ m unless otherwise indicated) 1995a 1996a 1997b 1998b Real GDP growth (%) 4.5c 5.2c 5.0 5.0 Consumer price inflation (%) 74 34 32 27 Merchandise exports fobd 1,431 1,510 1,500 1,690 of which: cocoa 390 509 500 650 gold 647 612 530 510 Merchandise imports fobd 1,678 1,823 1,903 2,000 Current-account balance –143 –252 –405 –270 Average exchange rate (C:$) 1,200 1,637 2,130 2,660

a Actual. b EIU forecasts. c Provisional. d Balance-of-payments basis.

Gross domestic product Real exchange rates (c) % real change, year on year 1990=100 6 130

5 120

4 110

3 100 Naira:$ Ghana 90 2 Africa 80 1 Cedi:$ 70 0 1994 95 96(a) 97(b) 98(b) CFAfr:$ (d) 60 (a) Provisional. (b) EIU forecasts. (c) Nominal exchange rates adjusted for changes in relative consumer prices. (d) Côte d'Ivoire. Sources: EIU; IMF, International Financial Statistics; World Economic Outlook. 1990 91 92 93 94 95 96 97(b) 98(b)

Review

The political scene

The president finalises the More than five months after he was re-elected as president last December, Jerry cabinet— Rawlings announced an almost complete cabinet list on May 31. The only portfolios still to be confirmed were those of national security—believed to be reserved for the former information minister, Kofi Totobi Quakyi—and foreign affairs. The latest version of the cabinet contains two important changes at senior ministerial level, one of which reflects further adjustment of the balance of power between regions. The first puts Fred Ohene Kena in charge of the important mines and energy department, which would benefit from the un- divided attention of a single minister. The ministry has been neglected since 1995, when its long-standing boss, Richard Kwame Peprah, assumed the finance portfolio on top of his existing duties. Since finance has taken most of Mr Peprah’s attention, mines and energy has been of secondary importance. The latest list also settles the status of Cletus Avoka, who has finally settled at

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lands and forestry, after being named for several other posts. The president first nominated Mr Avoka as minister for the latter’s home region, Upper East, then renominated him to works and housing. However, political bosses in Upper East lobbied for a more senior post for their man (works and housing is not a full cabinet portfolio) so the president moved him again, installing Isaac Adjei Mensah to the more junior position.

—but northern Reports on the lobbying and deals surrounding Mr Avoka’s appointment shed constituencies are some light on the pressures that caused the long delays in shaping the cabinet. dissatisfied— The Northern Region, which delivered 15 parliamentary seats for the ruling National Democratic Congress (NDC), reproved the president’s casting directors for allocating it only one senior cabinet seat, the employment and social welfare ministry, now headed by Mohammed Mumuni. Both the Northern and Upper East lobbies criticised the president for favouring the Upper West Region. The latter delivered only eight seats, but was allocated two senior cabinet posts, roads and transport—headed by Edward Salia—and defence, which was retained by Mahama Iddrisu.

—and critics say it violates Allied Research Ltd (ARL), the Accra-based independent analysts, have argued the constitution that the new cabinet list violates two separate articles of the constitution. First, the total of 79 to 80 ministers far outstrips the upper limit of 19 set in the constitution. Second, the constitution requires the government to choose the majority of ministers from among elected members of parliament (MPs), yet ARL said its research indicated that only 32 ministers, a minority, were MPs. No legal challenge appears to have been mounted along these lines so far.

The Supreme Court rules The Supreme Court in late May delivered its long-awaited verdict on a poten- against the NPP tially more serious dispute—whether ministers of the last government should be challenge— vetted and approved by MPs prior to serving again (2nd quarter 1997, page 8). The court rejected the petition of the New Patriotic Party (NPP) that second-term ministers not vetted by the parliamentary committee were serving unlawfully. However, its wording was ambiguous enough for both the NPP and the government to claim victory. The original petition, filed by the NPP MP, Joseph Mensah, argued that every presidential nominee for a cabinet appointment should first be approved by parliament, and that the terms of all ministers should end with that of the president. Mr Mensah defined “prior approval” as consideration and vetting by parliament, and argued that those not approved by such means could not lawfully be defined as ministers. The court agreed with the first two parts of Mr Mensah’s argument, but appears to have disagreed with his definition of “approval”. The justices ruled by four to one that: “Plaintiff’s relief that a necessary incident of prior approval is consideration and vetting by parliament, and whoever has not been so approved cannot lawfully hold him- self out as a minister or deputy minister, is denied.”

—but the NPP claims While the government seized on this as an endorsement of its policy which victory nonetheless submits only new ministers for vetting, and exempts “old” ones, the NPP claimed the ruling endorsed its petition, by implying that all ministers serving a fresh term are by definition “new” and should therefore be subject to vetting. The party then proceeded to stage walk-outs on subsequent days whenever a

EIU Country Report 3rd quarter 1997 © The Economist Intelligence Unit Limited 1997 10 Ghana

minister it deemed “illegal” appeared on the floor of parliament. Officials of the NPP later gave a press conference asserting that it would insist on application of the court’s judgement “to the letter”.

The underlying issue of The NPP had hoped to use vetting to unearth conflicts of interest between corruption is important— the official posts and private business of long-serving ministers. This reflects growing concern at home and abroad that corruption could be marring the president’s once relatively tight and honest ship. During the 1980s Mr Rawlings’s reform of the old statist order removed many embedded opportunities for corruption, and created one of the least corrupt regimes in Africa. However, economic liberalisation has created a larger national resource and new opportunities for corruption, as Ghana’s growing business sector vies for favour from different officials. Parliamentary vetting of “old” ministers would put those who have had the time and opportunity to use their office for personal gain on the spot. It would also enable honest ministers to disprove the allegations and innuendos which are feeding the growing sense of unease.

—but the NPP has played For all the sense vetting would make, the NPP appears to have acted clumsily, its cards clumsily— by focusing public attention on a seemingly endless and confusing debate on constitutional sophistry. This reflects the NPP’s membership and style: its many lawyers mounted several legal challenges before 1996 to establish the opposition’s constitutional rights. Since then, it has appeared unable to focus on other issues important to Ghanaians such as economic reform, poverty and policy alternatives to the NDC line. As such, the party is reinforcing the impres- sions that contributed to its poor showing in the last elections: images of an inward-looking party of lawyers and southern-based businesses, with no agenda for the country as a whole.

—and an internal NPP A public row within the party in July did little to dispel this. The row centred row makes things worse— around a story published the previous month in a US-based magazine, African Observer, which cast doubt on the political judgement of the defeated NPP presidential candidate, John Kufuor. The details of the report, which covered the circumstances surrounding some campaign vehicle donations, are obscure and complicated; the upshot is that Mr Kufuor accused his enemies in the party of planting the information to blacken his name, and his critics cast aspersions on his conduct of the 1996 election campaign.

—as the leadership focuses Observers trace the roots of the row to informal jostling for the presidential on elections in 2000 candidacy in 2000, ahead of the formal contest which is due to start next year. ARL reports that former NPP flagbearers such as Albert Adu Boahen (the party’s presidential candidate in 1992) and Mr Kufuor are already vying for the post. The African Observer added two other names: Kofi Aparaku, the shadow finance minister, and Nana Akuffo Addo, the MP for Abuakwa. While the scope and intensity of this struggle appears well short of the “civil war” depicted in the African Observer, the row and the reports are damaging. Most commentators argue that the party should first resolve its policy and in-house organisation.

The government smooths In a clear bid to avoid the mass protests and demonstrations that scuppered the way for VAT— its last efforts to impose value-added tax (VAT) in 1995, the government is

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preparing a major education campaign to prepare the public for reintroduction of the tax in January 1998. The campaign will explain clearly what the tax will be, how it should be applied and which companies will be registered to impose it on their sales. The government hopes to empower Ghanaians with the information to challenge potential abuses by traders and retailers. In 1995 many retailers raised prices purely for profit while falsely blaming the increases on VAT. Public anger exploded into the worst protests seen in Ghana for a decade, caused a major row in the government and contributed to the resig- nation of the former finance minister, Kwesi Botchwey.

—with an information A new information campaign is under way: in late July the deputy communi- campaign— cations minister, John Mahama, outlined some details of the plan. This entrusts information dissemination to several well-known bodies, including the Association of Ghana Industries, the Chamber of Commerce, the National Commission on Public Education and a special division of the education ministry. These bodies will explain that some 4,000 companies, namely those with a turnover in excess of C200m ($91,000), and good accounting records, are registered and authorised to impose the tax. They will also announce that the government will require authorised companies to display their registration certificates openly for inspection by consumers. While the government says basic items, including food and education, will be exempt, a full list of taxable and exempt goods is to be published at a later date.

—but is forced to The government should also draw lessons from recent protests against its efforts postpone higher to raise electricity prices. On June 6 the mines and energy ministry announced electricity tariffs that the Electricity Corporation of Ghana (ECG) would raise rates by 181%, applying the increase retrospectively to May 1. Consumers who were charged at the new rates claimed that the increase was in fact 300%. The mines and energy minister, Mr Kena, confused matters further with an announcement that the increase was in fact only 90%. The ECG and the Volta River Authority (VRA), which supplies hydroelectric power to the ECG, then called a press conference to explain that the VRA had upped its rates, and that ECG had therefore had to raise its own tariffs by 180%. Not surprisingly, these belated clarifications failed to assuage public anger. On July 23 the president showed he was in tune with the public mood. “The manner in which they did it could be destructive,” he said. “So much in a go is irresponsible.” A week later, as public protest swelled, he ordered Mr Kena to submit a bill to regulate the electricity sector, and ordered him to suspend the increase until a special commission of inquiry had reviewed the matter.

The Sierra Leone coup The May 25 coup in Sierra Leone created another foreign-policy challenge for provides a foreign-policy Ghana’s government, which has long been active in efforts to restore peace in challenge Sierra Leone’s neighbour, Liberia. Soon after the coup, staged by the self-styled Armed Forces Revolutionary Council (AFRC), Ghana organised bilateral talks with AFRC leaders and explored options for dealing with the crisis with other members of the Economic Community of West African States (ECOWAS). As a sign of the importance he attaches to this fresh threat to regional security, Mr Rawlings cancelled his visit to the Organisation of African Unity (OAU) summit in Harare and immediately contacted the AFRC leader, Johnny Paul

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Koromah, to urge a negotiated solution. While Ghana’s government has joined other ECOWAS leaders in condemning the coup and calling for the restoration of democracy, it appears to have been less hawkish about military intervention than Nigeria’s military head of state, General Sani Abacha. Judging by state- ments issued in Accra and Freetown, Ghana’s strategy focused on forcing the AFRC to the negotiating table with implicit threats of military intervention, while supporting an ECOWAS build-up in the event that the military option was chosen.

The government calls for On May 31 Ghana’s acting foreign minister, Kwamena Ahwoi, warned the AFRC negotiation, backed by coup leaders that time for a negotiated settlement was running out, and urged threats of force— them to respond to diplomatic efforts or risk military intervention by West African leaders. Reports on the same day that Nigerian forces were preparing to attack suggested that General Abacha favoured immediate military action, and on June 2 Nigerian troops shelled Freetown. On June 4 Ghana’s minister of state, Kofi Totobi Quakyi, said Ghana had sent troops solely to evacuate stranded Ghanaians, and that its soldiers were not fighting alongside Nigerians.

—but distances itself from Ghana later sent a delegation to Freetown headed by the deputy foreign the Nigerian shoot-out minister, James Victor Gbeho, who stated that Ghana wanted Sierra Leone returned to democracy through negotiation rather than by force. He also suggested that Nigeria’s shelling was a unilateral action, contradicting a Nigerian statement that the attack was “an ECOMOG affair” (a reference to the West African peacekeeping force in Liberia, the ECOWAS Ceasefire Monitoring Group, in which both Nigeria and Ghana are heavily represented). In a statement which appeared to underline the different positions taken, Mr Gbeho added: “Ghana is an important player in ECOWAS and any such ECOWAS involvement would have been decided at a summit of heads of states and not unilaterally.” For all its differences with Nigeria over Sierra Leone, Ghana has nevertheless supported Nigeria on other fronts. In mid-May, during a meeting with delegates to Ghana’s Commonwealth parliamentary association, Mr Rawlings called on the Commonwealth to encourage and support Nigeria in its efforts to rejoin the organisation.

The economy

The modest rise in the In mid-May the tripartite committee of government, employers and trade minimum wage will help unions agreed to raise the national daily minimum wage to C2,000 (91 cents), to curb inflation— an 18% increase on the previous C1,700. The new wage, which has been increased by far less than the projected inflation rate, should help offset infla- tionary pressures from other sources. The monthly consumer price index (CPI) rose by 3.4% in April, compared with an increase of 2.8% in March. The main culprit was food prices, which account for 49% of the index. These surged by 4.6% during the month, more than double the rate in April 1996. The spurt slowed the deceleration of the year-on-year rate, which dropped by only 0.1 of a percentage point, to 29.1%, at the end of April. Average inflation in the year to date continued on a downward trend, to 35.9%. Looking back over the longer term, first-quarter prices rose more slowly than in the corresponding quarters of 1995 and 1996, and price movements are in line with seasonal

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trends. The CPI’s monthly rate tends to rise during the pre-harvest months of April, May and June, and then to drop when food supplies become plentiful in July, August and September.

—and monetary expansion The latest data published by the IMF in its International Financial Statistics slows— indicate that the broad money supply grew by around 5% in the first quarter of 1997, to C1.9trn ($866m), a welcome deceleration on the 11.3% increase recorded for the fourth quarter of 1996. While narrow money (currency with the public and demand deposits) grew by 1.7%, quasi-money, which comprises savings and time deposits and certificates of deposits, raced up by 13% to C663bn.

—although it could still While the 5% expansion during the quarter marks a welcome slowdown, broad overshoot the target money supply could still be climbing a little too fast compared with the government’s 15% target for the year as a whole. In the past two years, money supply has tended to expand slowly in the first quarter (it rose by only 3.3% in January-March 1996) and then to gather steam in later months. This year the trend—and the outcome—could be different, given the government’s return to using money supply as the main anchor against inflation, and its retreat from Consumer prices and money supply using the exchange rate as a nominal anchor. The major source of monetary % change, quarter on quarter expansion was net foreign assets, which grew by 21% to C1.4trn, while dom-

Consumer price index estic credit grew by 9.6% to C2.3trn. Claims on the private sector accounted for M2 12 the largest increase in domestic credit, having grown by more than 18% to 11 C802bn. Net claims on central government rose by around C75bn, or 6.2%. 9 Money supply and credit 8 7 (C bn) 5 1996 1997 4 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 3 Money 943.38 992.38 1,079.96 1,215.72 1,236.76 1 Quasi-money 461.34 525.13 538.82 586.89 662.67 0 Q1 Q2 Q3 Q4 Q1 Money (M2) 1,404.72 1,517.51 1,618.78 1,802.61 1,899.43 199697 Counterpart funds 422.32 431.95 477.34 143.89 206.29 Source: IMF, International Financial Statistics. Other items (net) 981.76 1,097.44 969.98 1,332.21 1,616.23 Foreign assets (net) 851.10 847.42 713.39 1,173.29 1,415.07 Domestic credit 1,958.63 2,200.40 2,353.63 2,106.33 2,307.80 Source: IMF, International Financial Statistics.

Donors are encouraged, The modest wage settlement and the slowdown in monetary expansion would but await results on other suggest that the government is well on the way to securing endorsement for problems resumption of the interrupted Enhanced Structural Adjustment Facility (ESAF) at the IMF board meeting scheduled for mid-September. However, at the time of writing the government had still to fulfil other undertakings. Donors have asked Ghana to introduce a formula for regular automatic adjustment of petroleum prices, to reflect world crude price and exchange rate movements, and to make the Ghana National Petroleum Corporation (GNPC) repay outstanding loans to the Bank of Ghana (BoG, the central bank). The loans, believed to total around C128bn, date back to 1994, when they caused a major unplanned surge in the money supply and a row with the finance minister at the time, Mr Botchwey. Donors have also asked the government to review the legal foundation for some

EIU Country Report 3rd quarter 1997 © The Economist Intelligence Unit Limited 1997 14 Ghana

tax exemptions on import duties, and to eliminate some of the exemptions. More importantly, donors insist that the government impose tighter controls on public expenditure, which far exceeded its target last year.

The CEPA projects a large In its Macroeconomic Review and Outlook for 1997, the Accra-based think-tank, budget deficit— the Centre for Policy Analysis (CEPA) argues that the government is unlikely to restore fiscal prudence. The CEPA projects a fiscal deficit of C550bn this year, a significant difference of C741bn compared with the budget’s forecast surplus of C191.2bn. While the CEPA provides no detailed underlying explanations for its estimate, it argues that the government has overestimated the capacity of recently improved administrative machinery to control expenditure. It projects that outlays will be C400bn higher than government estimates, and that most of the overshoot will occur on the recurrent account. In particular, the CEPA calculates that the government has underestimated outlays on Items 2-5, which cover maintenance, travel and transport, and on likely personal emoluments.

Budget forecasts, 1997 (C bn) Official budget CEPA forecast Tax revenue 2,181.0 2,174.3 Non-tax revenue 763.3 428.7 Total revenue 2,944.3 2,603.0 Recurrent expenditure 2,084.1 2,391.2 Salaries 720.2 779.5 Items 2-5a 270.9 422.3 Subventions 246.3 274.3 Transfers 206.5 241.3 Interest payments 640.4 673.8 Domestic 460.0 460.0 External 180.4 213.8 Capital expenditure 669.0 761.8 Development 486.0 566.1 District assemblies 109.1 108.7 Net lending 7.0 20.0 Arrears clearance 67.0 67.0 Total expenditure 2,753.1 3,153.0 Budget balance 191.2 –550.0 Financing –191.2 550.0 Foreign (net) –245.8 –277.9 Inflows 283.5 320.5 Amortisation –529.3 –598.3 Domestic (net) 54.6 827.8

a Mainly maintenance, travel and transport.

Source CEPA, Macroeconomic Review and Outlook, 1997.

The CEPA’s projection of interest payments includes an additional C32bn to service foreign debt, reflecting higher local currency outlays caused by the likely depreciation of the cedi. The CEPA argues that the government is likely to spend C762bn on capital items, rather than the C669bn projected in the budget, and that most of the overshoot will occur in the development category. While the CEPA broadly agrees with the government’s budget projections on tax revenue,

EIU Country Report 3rd quarter 1997 © The Economist Intelligence Unit Limited 1997 Ghana 15

its forecast on “other” income differs. Whereas the budget assumes a significant recovery in non-tax revenue, to C763bn, the CEPA says this overestimates income and fees. Forecasting a deficit of C550bn, and net external payment obligations of C278bn (which factors in anticipated depreciation of the cedi), the CEPA concludes that the public-sector borrowing requirement (PSBR) will rise to C828bn, or around 5.8% of GDP.

—putting expansionary The CEPA forecasts that the higher PSBR will increase pressure on the money pressure on the money supply and interest rates, and that bank credit to the government will rise to supply— C423bn. The government will try to raise the rest through sales of high-yielding Treasury bills to the non-bank sector. The CEPA also says that the 1997 budget understated the actual deficit for last year. The BoG’s Quarterly Bulletin for the fourth quarter of 1996, which was published well after the budget, appears to confirm this, estimating the deficit at C335bn, or C193bn more than the C142bn originally stated in February. Accra sources say that additional capital spending accounted for much of the difference, along with an overestimate of divestiture receipts. On a more technical note, the CEPA also argues that the government underestimated money supply growth in 1996: while the budget reported that M2 grew by 34% to C1,785bn, the CEPA says that M2 probably reached around C1,848bn. It attributes the difference to the BoG’s possibly “erroneous” treatment of cheques in transit. When deposit banks have cheques in transit, the BoG tends to knock off corresponding entries in demand deposit holdings of commercial banks, to avoid “double counting”. The CEPA argues that since whatever is debited to one bank gets credited to another, the entries cancel each other out and remove the danger of duplication. Thus, rather than stating the true picture, the BoG’s technical treatment tends to understate money supply.

—and argues that the The CEPA also argues that BoG data and the 1997 budget, which attributed government has borrowed much of the growth in money supply to private-sector credit growth, fail to by proxy reveal the true extent of government borrowing. Net domestic credit was one of the major sources of change in last year’s money supply, having increased by C526.6bn. At first glance, private-sector borrowing, which amounted to C287bn, accounted for most of the increase, while credit to the government rose by a lesser amount of C226bn. The CEPA points out that since much of the private borrowing comprised pre-finance for private contractors working on state-funded projects, the government was in fact borrowing a good deal of money by “proxy”. To support this argument, the CEPA points to the C67bn in arrears to contractors which was carried over into the 1997 budget.

Donors project shrinking A donor report projected in June that the government’s foreign reserves foreign reserves— (including gold) will contract to $555m, or 2.7 months’ import cover this year, following their significant shrinkage in 1996. (It was not clear whether the figures were quoted on an average or year-end basis.) The report, which forecasts the government’s foreign exchange requirements during 1997-99, was compiled for the Special Programme of Assistance for Africa (SPA), a World Bank-managed programme that coordinates fast-disbursing balance-of- payments support by donors for reforming African countries. It indicates that official reserves (including gold) shrank to $599m (2.9 months’ import cover)

EIU Country Report 3rd quarter 1997 © The Economist Intelligence Unit Limited 1997 16 Ghana

last year, compared with $710m (3.8 months) in 1995. The IFS puts Ghana’s total foreign exchange reserves (excluding gold) at $829m at the end of 1996, rising to $873m by the end of February 1997, suggesting that private reserves have risen as the government’s have shrunk. Gold reserves were valued at $77m at the end of last year.

Foreign reserves ($ m) 1994 1995 1996 Government reserves incl golda 592.9 710.0 598.9 Total reserves minus goldb 583.9 697.5 828.7 Foreign exchangeb 554.3 669.2 801.5 Gold (national valuation)b 77.2 77.4 77.2

a SPA report. b IFS.

Sources: World Bank; IMF, International Financial Statistics.

—after intervention in the Some attribute the shrinkage to ongoing government intervention in the for- forex market eign exchange market, and the government’s use of the exchange rate as a nominal anchor against inflation last year. The CEPA’s data indicates that nominal exchange rate depreciation in the interbank market slowed to 21.3% in 1996, compared with a rate of 36.6% for the previous year. The exporters’ cost index suggests that the cedi appreciated by 24.2% in real terms, while the CPI-based index points to a 7% strengthening.

Ghanaians diagnose their A conference held in North Carolina, USA, in early June brought together an own economic ills unusual assembly of Ghanaian government, opposition and business leaders to discuss how to achieve the goals set out in Vision 2020, the president’s plan to raise Ghana to middle-income status by the third decade of the next century. Delegates diagnosed the main problem as government policy, concluding that the government needs to change the way it formulates the budget, and to increase the central bank’s independence, if it is to break the vicious circle of fiscal deficits and persistent inflation. Delegates added that the government’s response to changing patterns in aid flows had exacerbated fiscal problems. In the 1980s and early 1990s donor assistance was heavily weighted in favour of programme aid—cash funds which the government dipped into for counterpart funding for aid projects. Since 1993 the aid mix has shifted in favour of projects, requiring more counterpart funds, while the pool of aid cash to meet such requirements has diminished. Instead of making the necessary adjustments, the government has simply funded the gap with off-budget expenditures. These items are not formally debated, because the government usually presents parliament with a “narrow” budget, which excludes aid-financed projects.

Business and finance

Trading on the GSE The Ghana Stock Exchange (GSE) experienced a surge of activity during the first surges, but growth six months of this year, as the number of shares traded rose by 53% to 54.69m, remains moderate compared with 35.75m trades during the whole of 1996. Yet accelerated turnover brought no dramatic change in value to the market: the GSE all-share index grew by a steady, unexciting 6.8%. Much of the second-quarter growth occurred

in May, when the index rose to 385.42, before inching further by a fraction of a point to 385.59 in June. A few companies have put in sterling performances: the May edition of the monthly newsletter published by an Accra-based broker, Strategic African Securities, shows that Pioneer Tobacco Company’s stock grew by 92% to C255 (17 cents) in the year to May 31, while the auto retailer, Mechanical Lloyd, registered a 60% gain. Another four of the 21 companies listed on the GSE registered gains of above 20%. However, the majority of returns look poor when measured against average inflation of 36% (see The economy), and even worse when the cedi’s depreciation is also taken into account.

Local analysts differ over Some analysts are optimistic that investors, particularly foreign fund managers, market prospects will channel more investment into the GSE in the second half of 1997. An Accra-based broker, SDC Brokerage Services, argues that most emerging markets appear expensive relative to the low earnings multiple at which equities are currently trading on the GSE. It calculates the GSE weighted (non-gold) price- earnings ratio at 3.

Share price performance

Share price (C) % change, May 31, 1997 year to date Accra Brewery Ltd 620 8 Ashanti Goldfields Corporation 21,650 –4 Aluworks 1,200 –15 Compagnie française d’afrique occidentale-Ghana 24 20 Enterprise Insurance Company 525 22 Fan Milk Ltd 388 –4 Ghana Commercial Bank 660 –6 Guinness Ghana Ltd 358 30 Home Finance Company 150 10 Kumasi Brewery Ltd 800 21 Metalloplastica Ghana Ltd 180 20 Mechanical Lloyd 85 60 Mobil Oil Ghana 6,400 8 Pioneer Aluminium Factory 145 –15 Pioneer Tobacco Company 255 92 Paterson Zochonis 240 –35 Standard Chartered Bank 5,000 0 Super Paper Products Company 110 5 Social Security Bank 1,300 23 Unilever Ghana 875 9 UTC Estates 50 0 Source: Strategic African Securities.

Focusing on the domestic environment, another Accra-based broker, Databank, has expressed concern that structural economic problems will continue to undermine investment. “Given [the government’s] reputation for fiscal indisci- pline, there is widespread pessimism about the commitment to maintain money supply to control inflation”, it said in a report. If public finances move into another sizeable deficit this year, the government will continue to issue

high-yielding Treasury bills to cover the deficit, thus reducing the relative attraction of investing in GSE stocks, analysts say. Government borrowing and tight monetary policy are also keeping financing costs high, which erodes profit- ability and hence the attraction of stocks.

Agriculture

Producer prices are set— In mid-June the government set its new cocoa producer price at C1.8m ($821)/ton for the 1997/98 (October-September) season. With London futures prices for October-December around $1,774/ton at current sterling:dollar exchange rates, the new producer price would appear to be just under half the international price level.

—but prospects for the The mid-season crop for 1996/97 has performed according to expectations, and 1997/98 season remain Ghana is coming to terms with the fact that the current season will yield a uncertain— poorer than average 330,000-340,000 tons. Poor weather in Ghana has raised concern about the forthcoming season, and some analysts are not ruling out another disappointing crop. “We’ve had no rains so far, and the prospects for 1997/98 are not good,” said one analyst in early July. However, the EIU’s World Commodity Forecasts (WCF) takes a more optimistic line, projecting that output next year will rise to 370,000 tons. The global production deficit appears likely to end the 1996/97 season lower than previously anticipated, with forecasters now projecting that consumption will exceed production by some 85,000 tons. WCF forecasts world stocks at 1.8m tons at the end of 1997, a fall of 6.5% on the previous year, declining more slowly to 1.73m tons by the end of 1998. Faced with the prospect of more abundant supply than previously thought, WCF now forecasts average world cocoa prices of 71.9 cents/lb in 1997 and 80.5 cents/lb in 1998.

—although much of the The Ghana Cocoa Board (Cocobod) normally sells much of the forthcoming crop will already have season’s crop forward, but rarely discloses the volumes and values of forward been sold sales before the end of the year. In the absence of precise information, we assume that Cocobod sold a good portion of the 1997/98 crop during April and May, to capitalise on the bullish futures prices then prevailing (2nd quarter 1997, page 16). On this basis, and assuming production of 370,000 tons in 1997/98, earnings could reach around $650m in calendar 1998.

Mining

Ashanti’s gold Ashanti Goldfields Corporation (AGC) has reported a rise of nearly 10% in its production rises— gold output in the first half of 1997, to 571,795 oz, and says the company is on track to meet its target of 1.1m oz for the year as a whole. Many of the gains have come not from AGC’s largest mine at Obuasi, but from assets acquired during the past year or so. Iduapriem, acquired late last year, contributed 74,646 oz, while Ayanfuri brought in 29,062 oz and Freda Rebecca contributed 51,039 oz. Obuasi’s output fell by 7%, to around 417,000 oz, but AGC said this represented 99.3% of target, implying that some decline had been planned. The management has cut surface operations to reduce unit costs, having mined

less than half the quantities of ore and waste processed during the comparable period last year. The surface mine yielded 182,810 oz against levels of more than 217,000 oz a year previously. Output was also affected by unexpected factors, including power disruptions, which had a serious impact on the sulphide treatment plant’s operations, and equipment failures and some ground control problems at the underground mine. The latter produced only about 6,000 oz more than last year, while output from the tailings plant fell by 9% to 30,265 oz.

AGC gold production, Jan-Jun (fine oz) 1996 1997 Obuasi 448,508 417,048 of which: underground 198,024 203,973 surface 217,173 182,810 tailings 33,311 30,265 Ayanfuri n/a 29,062 Iduapriem n/a 74,646 Freda Rebecca n/a 51,039 Total – 571,795 Source: AGC.

—and its hedging strategy AGC’s turnover rose to $260.6m in the first half of 1997, compared with defies the world price $241.7m in the same period last year. This is a considerable achievement given tumble— that the average spot price for gold fell to $347/oz from over $390/oz in January- June 1996. AGC’s skilful hedging department secured an average price of $450/oz for the period—$103/oz above the spot price—and has also bought protection for nearly five years of future production at a price of over $420/oz.

—but profits have still However, AGC’s financial wizards were unable to fend off higher production dropped outlays, with cash operating costs in the first half of 1997 rising to $265/oz compared with $251/oz in the same period of last year, and total costs increasing to $222m from $195m. This ate into operating profits, which dipped to $38.8m from $46.6m, causing pre-tax profits to drop to $24m from $39m. AGC has made a strong bid to shave some costs and control others, but most of the results are unlikely to be seen until next year at the earliest. This quarter the company completed a voluntary redundancy programme to reduce the work- force by 800. A phasing out of private contractors working on the surface operations has already cut costs in surface mining, and a deal with the Ghana Mineworkers’ Union has set wage costs for the coming year.

Gencor sells Ghana assets South Africa’s Gencor announced in early June that it had signed a memoran- dum of understanding to sell a substantial chunk of its assets in Ghana to Canada’s Eldorado Gold Corporation. The deal, worth $193m, includes a 90% interest in Bogosu Mines and eight exploration properties in Ghana, together with a package of Gencor’s South African assets.

Energy and infrastructure

Ashanti courts Ivorian gas AGC is exploring the possibility of importing natural gas from neighbouring suppliers Côte d’Ivoire to meet future energy needs, the company’s chief executive, Sam Jonah, said in late July. The move appears to pre-empt government plans to fuel mines in western Ghana with electricity produced from the offshore Tano gas- field. The Tano Gas Fields Development project (2nd quarter 1997, page 20) is reportedly moving ahead, and the chairman of the Ghana National Petroleum Corporation (GNPC), Tsatsu Tsikata, expects the first electricity to be produced by the middle of next year. Mr Jonah, who said he was looking at options to secure future regular and “correctly priced” energy supplies, could well be suggesting dissatisfaction with the terms he expects the government to offer. AGC has already indicated its unhappiness with the government’s pricing of existing power, having negotiated a reduction in tariffs to 4 cents/kwh during the second quarter of 1997.

Fire puts the Tema Plans to reopen Ghana’s 45,000 barrels/day (b/d) Tema Oil Refinery (TOR) refinery out of action for following its recent upgrade were tragically thwarted on July 18, when a large months fire killed two workers and injured three. The fire, which broke out during a test run, caused an estimated $10m worth of damage to equipment. Necessary repairs are likely to keep the refinery, which has been closed since January for the upgrade, out of action for another four to five months. The closure also means that GNPC will have to sell feedstock crude, and use the proceeds to buy in fuel oil and petrol. The mines and energy ministry has set up a technical committee to look into the causes and extent of the damage, and has yet to reveal its findings. Initial reports point to an explosion in the topping unit of a vessel at the plant, where workers were repairing a leak.

Foreign trade and payments

Donors highlight The report prepared by donors for the World Bank-managed SPA (see The medium-term financing economy), estimated that Ghana will need around $660m in total fast- requirements disbursing assistance during 1997-99 ($220m per year), dubbed “SPA4”. Donors have so far indicated that they will disburse $422m, comprising $176m from the International Development Association (IDA, the World Bank’s concessional lending arm), $150m from the IMF and $96m from bilateral cofinanciers’ commitments made during SPA3, which ran from 1994 to 1996. To build in some room for manoeuvre, the SPA estimates that donors need to make total new commitments of $300m to meet the required disbursements. So far only $46m has been agreed for SPA4.

The SPA estimates that Ghana’s foreign exchange requirements will total $2.85bn this year. It projects export earnings at $1.71bn, private transfers at $297m and direct investment at $36m. Non-adjustment aid is expected to yield $397m, and adjustment support $161m. Based on these calculations (and presumably unspecified bilateral cofinancings), it projects the residual financing gap for 1997 alone at $90m.

External debt registered Data from the BoG indicate that the country’s external debt rose by 5.4% in few surprises in 1996 1996, to $5.35bn, implying some acceleration in borrowing after the modest 1% growth registered the previous year. (The BoG’s data series differs from that of the World Bank’s Global Development Finance—formerly the World Debt Tables— which puts Ghana’s total external debt at $5.87bn at the end of 1995, the most recent figure available.) According to the BoG, short-term loans and overdraft facilities recorded the highest growth, increasing by 13.4%, while long-term obligations grew the most in absolute terms, adding $350m, mostly on the multilateral account. Compared with last year’s export earnings, the increase Structure of external debt, 1996 % of total appeared manageable, given that the debt-service ratio rose by a marginal 0.1 of a percentage point to 27%. However, some analysts continue to express concern that short-term debt is creeping upwards, largely because of depleted foreign exchange reserves. For all that, the BoG data suggest that the government is Medium-term 16.5 Short-term 5.3 organising the rest of its debt obligations quite well. Trends indicate a structural change in the composition of maturities, with an easing of medium-term obligations, which accounted for 35% of total debt in 1991, to only 16% last year, while long-term obligations have risen from 64% of the total in 1991 to 78% in 1996. Long-term 78.2 External debt ($ m) 1994 1995 1996 Source: Bank of Ghana, Quarterly Economic Bulletin. Short-term 267.6 270.5 286.0 Loans & overdrafts 225.8 190.5 216.0 Oil 41.8 80.0 70.0 Medium-term 1,212.9 976.0 881.7 of which: non-oil 501.8 316.7 328.3 IMF 700.3 648.5 542.6 Long-term 3,541.7 3,827.8 4,179.3 Bilateral 923.3 1,026.9 1,154.3 Multilateral 2,618.4 2,800.9 3,025.0 Total debt 5,022.2 5,074.3 5,347.0 Source: Bank of Ghana, Quarterly Economic Bulletin.

The UK approves £25m for The UK has approved aid of £25m ($40m) to fund Ghana’s Health Sector health Improvement Programme, which aims to extend healthcare into remote rural areas, which have long been neglected in favour of cities and towns. It aims to reduce Ghana’s infant mortality rate to 50 per 1,000 live births, from the present 55, and to halve the maternal mortality rate to 100 from 214 per 100,000 live births. More general goals include raising life expectancy to 60 years (from the current 58) and reducing population growth (through family planning) from 3% to 2.75% annually. The money will be spent on medical equipment and supplies, training, vaccines, health education and improving administration in the health service. The project is also being funded by the World Bank, the World Health Organisation (WHO), the EU, Denmark and the USA.

Quarterly indicators and trade data

Quarterly indicators of economic activity

1994 1995 1996 1997 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr Agriculture Qtrly totals Cocoa: exports ’000 tons 48.7 62.4 79.1 65.9 31.4 92.1 82.8 124.3 n/a n/a Prices Monthly av Consumer prices, Accra: 1990=100 225.1 255.1 304.3 350.6 382.8 426.8 468.9 488.8 510.5 556.5 change year on year % 31.8 39.2 56.1 69.0 70.1 67.3 54.1 39.4 33.4 30.4 Cocoa, New York & London US cents/lb 64.7 67.5 65.8 63.0 63.7 61.4 68.3 67.6 66.8 65.4a Money End-Qtr M1, seasonally adj: C bn 619.24 645.10 761.63 822.67 826.15 863.90 1,026.25 1,202.63 1,086.43 1,128.43 change year on year % 49.9 53.7 52.8 38.0 33.4 33.9 34.7 46.2 31.5 30.6 Foreign trade Qtrly totals Exports fobb $ m 401.7 438.4 455.5 425.8 371.6 531.0 423.9 454.6 402.8 150.9c cocoa beans “ 52.4 113.3 148.8 129.8 69.4 188.4 195.0 306.0 101.7 n/a Imports cifb ” 659.2 581.7 592.1 593.1 713.8 791.5 705.7 728.4 876.9 225.2c Exchange holdings End-Qtr Monetary authorities: goldd $ m79788079798080797872e foreign exchange “ 554 614 421 590 669 683 648 605 802 845e Exchange rate Market rate C:$ 1,052.6 1,111.1 1,176.5 1,298.7 1,449.3 1,587.3 1,666.7 1,724.1 1,754.4 1,892.7

Note. Annual figures of most of the series shown above will be found in the Country Profile. a Average for 2 Qtr 1997, 73.1. b DOTS estimate, figures are subject to revision. c January only. d End-quarter holdings at quarter’s average of London daily price less 25%. e End-February.

Sources: ICCO, Quarterly Bulletin of Cocoa Statistics; IMF, International Financial Statistics; Direction of Trade Statistics, quarterly.

Foreign tradea ($ ’000; monthly averages) UK Germany USAb Jan-Apr Jan-Apr Jan-Dec Jan-Dec Jan-Dec Jan-Dec 1996 1997 1994 1995 1994 1995 Exports to Ghana fob Food, drink & tobacco 1,097 1,315 336 422 2,848 3,109 of which: cereals & preparations 335 219 90 107 2,679 2,877 Textile fibres 430 322 202 205 402 448 Petroleum & products 247 154 240 274 426 638 Chemicals 3,888 5,033 922 1,785 1,150 1,799 Paper & manufactures 906 659 266 378 34 123 Textile yarn, fabrics & mnfrs 219 341 70 61 191 166 Non-metallic mineral mnfrs 348 479 118 97 38 140 Iron & steel 1,077 1,301 137 411 191 87 Metal manufactures 2,455 2,772 435 598 150 175 Machinery incl electric 10,694 14,941 2,931 4,407 2,678 4,008 Transport equipment 4,836 4,348 2,136 3,283 796 726 Total incl others 35,079 40,388 8,643 13,900 10,114 13,891 Imports from Ghana cif Cocoa beans 16,807 8,926 5,700 3,602 934 4,592 Cocoa butter 1,912 1,144 1,662 3,433 0 0 Wood 1,202 1,830 3,712 4,518 228 324 Industrial diamonds 3 0 42 25 403 365 Metalliferous ores & scrap 1,127 1,278 381 342 0 37 Petroleum & products 630 0 146 371 2,032 0 Non-metallic mineral mnfrs 5 10 8 4 11,940 9,987 Aluminium & alloys 4,199 2,249 7,101 2,911 403 30 Total incl others 29,344 20,949 20,097 17,285 17,132 16,897 a Figures from partners’ trade accounts. b US exports to Ghana averaged $18.2m and $27.0m per month in the period January-April 1996 and 1997. US imports from Ghana averaged $14.4m and $15.3m per month in the period January-April 1996 and 1997.

Sources: UK HM Customs & Excise, Business Monitor, MM20; UN, External Trade Statistics, series D; USA Department of Commerce News, FT900.

Direction of tradea

Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Exports fob 1993 1994 1995 Imports cif 1993 1994 1995 Germany 14,833 18,250 19,475 UK 29,667 26,833 34,100 UK 8,167 16,083 19,425 Nigeria 27,750 28,583 32,300 USA 16,583 15,583 15,367 Germany 9,750 9,500 14,733 Togo 8,917 10,167 13,067 USA 19,667 11,417 14,400 France 4,833 7,167 10,442 Italy 4,917 13,667 12,175 Total incl others 103,333 132,917 140,825 Total incl others 4,917 13,667 212,975 a DOTS estimate.

Source: IMF, Direction of Trade Statistics, yearly.