COUNTRY REPORT Ghana October 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 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 conferences and roundtables. The firm is a member of The Economist Group. 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ISSN 1350-7052 Symbols in 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 2001-02 7 Political outlook 8 Economic policy outlook 9 Economic forecast 12 The political scene 15 Economic policy 16 The domestic economy 16 Economic trends 18 Agriculture 19 Industry and mining 21 Infrastructure and other services 22 Financial and other services 22 Foreign trade and payments List of tables 9 International assumptions summary 10 Forecast summary 13 Candidates for president in the December 2000 election 16 Real GDP growth by sector, official figures 18 Agricultural growth, official figures 19 Industrial growth 19 Mineral production List of figures 11 Gross domestic product 11 Real exchange rates 17 Exchange rate © The Economist Intelligence Unit Limited 2000 EIU Country Report October 2000 Ghana 3 Summary October 2000 Outlook for 2001-02 The presidential election to be held on December 7th 2000 will be dominated by the vice-president, John Atta Mills (National Democratic Congress) and John Kuffuor (New Patriotic Party). Mr Atta Mills is marginally favoured to win. The contest for parliamentary seats is expected to be much closer, possibly resulting in no party having an overall majority. The economy is forecast to begin recovering in 2001. Growth is forecast at 3.5% in 2001 and 3.7% in 2002. With good rains and the government maintaining cedi prices for domestic producers, cocoa production will rise, helping crop production to increase and driving growth in the important agricultural sector. The resumption of donor inflows will allow the government to continue infrastructural development and provide the foreign exchange required by the import-reliant services and industrial sectors. Higher inflows will also reduce the government’s reliance on domestic debt, leading to reductions in interest rates and the crowding out of the private sector. The depreciation of the cedi will continue to slow over the outlook period. Nominal average depreciation will decline to 31% in 2001 and 14% in 2002. The political scene Seven candidates will stand in the presidential election; four of them have nominated vice-presidential candidates from the north hoping to woo the critical Muslim vote. Both the NDC and the NPP have launched their manifestos for 2000 and beyond. These focus on the policy measures the parties will take to improve socioeconomic conditions in Ghana. Economic policy Pressure to finance the domestic budget deficit has forced the government substantially to increase its domestic borrowing. In consequence, the interest rate has increased and the private sector has been crowded out. The government has come under increasing pressure to reduce expenditure and improve the collection of fiscal revenue. The domestic economy GDP growth rates fell during 2000, mainly owing to a deterioration in the terms of trade caused by continued low international prices for gold and cocoa. Foreign-exchange constraints slowed growth in the manufacturing and services sectors. The weakness of the currency and increased prices for oil have pushed inflation upwards. Inflation will be 30% by the end of the year. Foreign trade and The economy is expecting about US$600m in foreign-exchange inflows by payments December 2000. The inflows will enable the government to cut down its borrowing from the domestic financial market and help reduce interest rates. Editors: John Arthur (editor); David Cowan (consulting editor) Editorial closing date: October 13th 2000 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected] Next report: Full schedule on www.eiu.com/schedule © The Economist Intelligence Unit Limited 2000 EIU Country Report October 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 1996 (presidential and parliamentary); next elections due December 7th 2000 Head of state President, elected by universal suffrage for a maximum of two four-year terms; currently Jerry John Rawlings, now in his second term National government Cabinet, partly 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: New Patriotic Party (NPP); People’s National Convention (PNC); Convention Party (CP); Convention People’s Party (CPP); 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 Adje Planning, regional economic co-operation and integration Kwabena Ahwoi Roads & transport Edward Salia Tourism Mike Gizo Trade & industries Dan Abodakpi Works & housing Isaac Adjei-Mensah Youth & sports Enoch Teye Mensah Central bank governor Kwabena Duffuor EIU Country Report October 2000 © The Economist Intelligence Unit Limited 2000 Ghana 5 Economic structure Annual indicators 1996 1997 1998 1999 2000a GDP at market prices (C bn) 11.3 14.1 17.2 20.3 25.5 GDP (US$ bn) 6.9 6.9 7.5 7.7 4.5 Real GDP growth (%) 4.6 4.2 4.5 4.2 1.0 Consumer price inflation (av; %) 46.6 27.9 14.6 12.4 23.0 Population (m) 17.5 18.0 18.5 18.9 19.4 Exports of goods fob (US$ m) 1,570.1 1,489.9 2,090.8 2,116.6 1,686.6 Imports of goods fob (US$ m) 1,937.0 2,128.2 2,896.5 3,228.1 2,090.5 Current-account balance (US$ m) –324.7 –549.7 –380.0 –766.0 –373.1 Foreign-exchange reserves excl gold (US$ m) 828.7 480.1 377.0 453.8 200.0 Total external debt (US$ bn) 6.4 6.4 6.9 7.2 7.1 Debt-service ratio, paid (%) 23.9 28.1 20.0 14.9 17.8 Cocoa productionb (‘000 tonnes) 404 323 409 390 420 Gold production (m fine oz) 1.6 1.6 2.2 2.4 2.4 Exchange rate (av) C:US$ 1,637 2,050 2,314 2,647 5,631 October 16th 2000 C6,850:US$1 Origins of gross domestic product 1998 % of total Components of gross domestic product 1998 % of total Agriculture, forestry & fishing 41.4 Private consumption 69.9 Industry 14.7 Government consumption 18.2 of which: manufacturing 8.4 Gross domestic investment 8.1 Services 43.9 Exports of goods & services 17.2 GDP at factor cost 100.0 Imports of goods & services –13.4 GDP at market prices 100.0 Principal exports 1998 US$ m Imports 1990 US$ 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 1998c % of total Main origins of imports 1998c % of total Togo 12 Nigeria 14 UK 12 UK 12 Italy 11 Italy 9 Netherlands 8 US 7 US 7 Spain 6 a EIU estimates.