COUNTRY REPORT Ghana 1st quarter 1999 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 1999-2000 10 Review 10 The political scene 13 Economic policy 16 The economy 18 Agriculture 19 Mining and industry 20 Energy 21 Business and finance 24 Foreign aid and payments 26 Quarterly indicators and trade data List of tables 10 Forecast summary 13 The 1999 budget: selected macroeconomic targets, 1998-2001 14 Government finances, 1998 14 Government finances, 1999-2001 15 Government expenditure by largest functional classification, 1999 17 GDP estimates 22 Ghana stockmarket: top returning shares, 1998 23 Sub-Saharan Africa’s top ten largest companies, 1998 26 Quarterly indicators of economic activity 27 Foreign trade 27 Direction of trade List of figures 10 Gross domestic product 10 Real exchange rates 17 Consumer prices, 1998 17 Interest rates 22 Equity prices EIU Country Report 1st quarter 1999 © The Economist Intelligence Unit Limited 1999 Ghana 3 February 24th 1999 Summary 1st quarter 1999 Outlook for 1999-2000: The vice-president, John Atta Mills, has begun his campaign to become leader of the ruling National Democratic Congress (NDC). He will probably get the backing of the party which will almost certainly win the presidential and legislative elections in 2000. The Reform Movement (RM), a splinter group of the NDC, will not divide the ruling party. The main oppos- ition New Patriotic Party has little hope of garnering support at a national level. The government is set to remain on good terms with international donors in 1999 and 2000. Economic reforms will proceed, but privatisations will be slowed down by political pressures. Real GDP growth is forecast to rise to 4.8% in 1999 and 5.3% in 2000. A sharp depreciation of the currency and rising inflation are expected in 1999. Greater currency stability, and a fall in inflation are forecast for 2000. Exports will grow steadily in 1999 leading to an improve- ment in the current-account balance in 1999, but a rise in imports in 2000 will see it deteriorate again. The political scene: Vice-president Atta Mills has lashed out at critics who doubted his abilities to take over the helm of the NDC, exposing personal rifts in the party. Meanwhile, the dissident Reform Movement has declared itself a party. Ghana has sent more troops to Sierra Leone. Economic policy: The 1999 budget has been presented, with no surprises, and the government continues to target sound macroeconomic policies. The fiscal deficit in 1998 was lower than expected, at 6.3% of GDP, and the govern- ment aims to reduce it further to 5.2% in 1999. VAT has been re-introduced, seemingly without problems. An Article IV consultation has been concluded with the IMF. Nevertheless, privatisation remains a contentious issue. The economy: The government’s estimate of 4.6% real GDP growth in 1998 seems unrealistic but seems to have been accepted by the IMF. Year-end infla- tion has fallen to 15.7% allowing a reduction in interest rates. The cedi has appreciated in real terms against the US dollar. Agriculture: Cocoa-sector reforms will progress and the state buying com- pany has been earmarked for privatisation. International cocoa prices have fallen. Ghana’s cocoa tree stock needs to be replaced. Mining, energy and industry: Mining exports dropped by 10% in 1997 because of falling world gold prices. However, Ashanti Goldfields Corporation boosted production and cut costs in 1998. The regional gas pipeline from Nigeria looks set to go ahead. Aluminium production is increasing. Business and foreign payments: The Ghana Stock Exchange was Sub- Saharan Africa’s best performer in 1998. Several new listings are expected in 1999. Two telecoms companies are battling for market share. International re- serves have fallen but an IMF disbursement has been approved. Editor: Piers Haben All queries: Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 EIU Country Report 1st quarter 1999 © The Economist Intelligence Unit Limited 1999 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 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); United Ghana Movement (UGM); Reform Movement (RM) President Jerry John Rawlings Vice-president John Atta Mills Key ministers Agriculture Joseph Owusu-Acheampong Attorney-general & justice Obed Asamoah Communications John Mahama Defence E K T Donkoh Education Ekwow Spio-Garbrah Employment & social welfare Mohammed Mumuni Environment, science and technology Cletus Avoka Finance Richard Kwame Peprah Food & agriculture Kwabena Adjei Foreign affairs Victor Gbeho Health Samuel Nuamah-Donkor Interior Nii Okaidja Adamafio Lands & forestry Christine Amoako-Nuamah Local government Kwamena Ahwoi Mines & energy Fred Ohene Kena Parliamentary affairs Kwabena Adjei Roads & transport Edward Salia Tourism Mike Gizo Trade & industries John Frank Abu Works & housing Issac Adjei-Mensah Youth & sports Enoch Teye Mensah Central bank governor Kwabena Duffour EIU Country Report 1st quarter 1999 © The Economist Intelligence Unit Limited 1999 Ghana 5 Economic structure Latest available figures Economic indicators 1994 1995 1996 1997 1998a GDP at market prices (C bn) 4,950 7,418 10,385 14,113 17,200 Real GDP growth (%) 3.6 4.5 5.2 5.1 1.9 Consumer price inflation (av; %) 24.9 74.3 34.0 27.9 19.4b Population (m) 16.86 17.34 17.83 18.34 18.75 Exports fobc ($ m) 1,238 1,431 1,571 1,490 1,462 Imports fobc ($ m) 1,580 1,678 1,937 2,128 2,098 Current account ($ m) –255 –145 –324 –541 –516 Reserves excl gold ($ m) 583.9 697.5 828.7 500.0a 320 Total external debt ($ m) 5,464 5,872 6,202 6,047a 6,290 External debt-service ratio, paid (%) 22.9 21.4 23.5 27.4a 26.6 Cocoa productiond (’000 tonnes) 290 404 340a 400a 390 Gold production (m fine oz) 1.5 1.6 1.6 1.6a 1.7 Exchange rate (av; C:$) 956.7 1,200.4 1,637 2,050 2,300 February 19th 1999 C2,365:$1 Origins of gross domestic product 1996 % of total Components of gross domestic product 1997 % of total Agriculture, forestry & fishing 40.6 Private consumption 80.0 Industry 14.2 Government consumption 12.4 Manufacturing 8.1 Gross domestic investment 23.6 Services 48.4 Exports of goods & services 19.8 GDP at factor cost 100.0e Imports of goods & services –36.5 GDP at market prices 100.0f Principal exports 1996 $ m Principal imports 1990 $ m Gold 612 Capital goods 544 Cocoa beans & products 552 Intermediate goods 356 Timber 147 Fuel & energy 210 Consumer goods 124 Main destinations of exports 1997g % of total Main origins of imports 1997g % of total Togo 13 UK 15 UK 12 Nigeria 14 Germany 10 US 10 US 9 Germany 6 France 7 Spain 5 a EIU estimates.