COUNTRY REPORT Ghana Ghana at a glance: 2002-03 OVERVIEW The New Patriotic Party (NPP) government will persist with its investigations into cases of maladministration and corruption on the part of the previous government. While this will lead to tensions between the opposition National Democratic Congress (NDC) and the NPP, a military coup is not expected. The government will meanwhile continue to focus on reforms designed to improve macroeconomic stability. Efforts to reduce the country’s fiscal deficit, together with a range of other policy reforms, donor support and recovery in the agricultural sector, should lead to a gradual acceleration of GDP growth. As fiscal and monetary policy is more co- ordinated, the Economist Intelligence Unit forecasts a gradual decline in the inflation rate, while improved macroeconomic stability should see the value of the cedi stabilise. Key changes from last month Political outlook • The president, John Agyekum Kufuor, has performed his first cabinet reshuffle, in an attempt to improve the government’s ability to implement economic policy. Economic policy outlook • The government has issued a three-year Government of Ghana index- linked bond (GGILB), to replace up to 50% of the domestic debt of C6trn (US$844m), now held in 91- and 182-day Treasury bills. The instrument’s interest and principal are linked to the consumer price index, providing full inflation protection to the holder. Economic forecast • Our economic forecasts have been moved on by one year to 2003. We now expect growth to pick up to 4.8% of GDP in 2003, against a background of falling inflation. The fiscal deficit will fall substantially as a percentage of GDP. The return of macroeconomic stability and donor support should help to stabilise the value of the cedi. 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Ghana 1 Contents 3 Summary 4 Political structure 5 Economic structure 5 Annual indicators 6 Quarterly indicators 7 Outlook for 2002-03 7 Political outlook 8 Economic policy outlook 9 Economic forecast 12 The political scene 17 Economic policy 21 The domestic economy 21 Economic trends 22 Agriculture 23 Industry and mining 25 Infrastructure and communications 25 Financial and other services 27 Foreign trade and payments List of tables 10 International assumptions summary 11 Forecast summary 19 Government finances 22 Exchange rates, 2001 28 Current account 29 FDI inflows List of figures 12 Gross domestic product 12 Real exchange rates 21 Inflation, 2001 EIU Country Report October 2001 © The Economist Intelligence Unit Limited 2001 Ghana 3 Summary October 2001 Outlook for 2002-03 The New Patriotic Party (NPP) government will persist with its investigations into cases of maladministration and corruption on the part of the previous government. This will lead to tensions between the opposition National Democratic Congress (NDC) and the NPP. The government will continue to focus on reforms designed to improve macroeconomic stability. Efforts to reduce the country’s fiscal deficit—together with a range of other policy reforms, donor support and recovery in the agricultural sector—should lead to a gradual acceleration of GDP growth. Thanks to more co-ordinated fiscal and monetary policy, the inflation rate should steadily decline. The improvement in the macroeconomy should stabilise the value of the cedi. The political scene President John Kufuor has carried out a cabinet reshuffle, seeking to improve the ability of the government to push through economic reform. The corruption investigations have increased tensions with the former president, Jerry Rawlings, and the NDC has threatened to boycott the investigation panels. Parliament has approved a loan from the International Development Association, after initially refusing. Economic policy Although it has not produced a secondary budget, as promised earlier in the year, the government has outlined measures to boost revenue and control expenditure. These will form the basis of the 2002 budget, although the government’s projections may prove overoptimistic. Ghana has been working to repair its relations with the IMF, after an earlier disbursement under the country’s poverty reduction and growth facility (PRGF) arrangement was deemed non-complying. The domestic economy Inflation has fallen since March 2001 and the trend is expected to continue, thanks to an expected bumper food harvest and the relative stability of the exchange rate. New producer prices for cocoa have been announced, while cashew-nut farming is set to increase. The government has said that it will sell the Tema Oil Refinery. A new three-year inflation-indexed bond has been launched; initial take-up has been good. Foreign trade and payments The IMF has produced a detailed forecast of Ghana’s current-account position. In line with the government’s projections, it hopes for rapid growth in non- traditional exports, driven by new policy initiatives and supported by a more competitive cedi. The UN Conference on Trade and Development says that flows of foreign direct investment into Ghana have increased, whereas the Ghana Investment Promotion Centre believes that they have fallen. Editors: John Arthur (editor); David Cowan (consulting editor) Editorial closing date: October 17th 2001 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected] Next report: Full schedule on www.eiu.com/schedule EIU Country Report October 2001 © The Economist Intelligence Unit Limited 2001 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 (NRP) President John Agyekum Kufuor Vice-president Alhaji Aliu Mahama Key ministers Attorney-general & justice Nana Akufo Addo Communications & technology Felix Owusu Adjapong Defence Kwame Addo Kufuor Economic planning & regional integration Paa 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 Kasim Kasanga Local government Kwadwo Baah-Wiredu Manpower development & employment Cecilia Bannerman Mines Kwado Adjei Darko Parliamentary affairs J H Mensah Roads & transport K Adjei-Darko Tourism Hawa Yakubu Trade & industries Kofi Konadu Apraku Works & housing Yaw Barimah Youth & sports Edward Osei Kwaku Central bank governor Kwabena Duffour EIU Country Report October 2001