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Ghana's Economy Facing Challenges

Postby The Prince » Mon Nov 17, 2008 11:51 pm

Economy facing challenges

Accra, Nov. 17, GNA - The Institute of Economic Affairs (IEA) on Monday said despite economic growth recorded in the past, there was deterioration in the performance in 2007, continuing the trend started in 2006.

"In spite of the achievement of growth rates of slightly above six per cent the relative macroeconomic stability achieved during the period 2001-2005, marked by declining inflation and interest rates and low government budget deficits, the economy showed clear signs of stress in 2006 and 2007."

The IEA stated in its annual 2007 Economic Review and Outlook documents made available to the Ghana News Agency in Accra that the performance of the economy deteriorated further in the first half of 2008 (January to June 2008) with rising inflation which peaked at 18.4 per cent in June 2008.

The Economic Review presents an overview of the performance of the economy during the calendar year 2007 and outlook for 2008 and beyond based on provisional data released by the Ghana Statistical Service. The IEA 2007 Economic Review and Outlook Survey was conducted by a team of economists including Dr Kwabena Asomanin Anaman, IEA Head of Economic Centre and Director of Research, Professor Alhassan Wayo Seini, IEA Senior Fellow, Prof John Asafu-Adjaye, IEA Senior Fellow and Mrs Charity Osei-Amponsah, IEA Research Assistant.

The rest are Dr Daniel Bruce Sarpong, Senior Lecturer and Head, Department of Agricultural Economics and Agribusiness, University of Ghana, Dr. Kofi Marfo, Mrs Abigail Abandah-Sam, Mr Matthew Armah and Mr Martin Esan Benjamin, all Seniors Executive Officers of Millennium Development Authority (MiDA), Accra.

The IEA Economic Review identified three major deficits - government budget, balance of trade and balance of payment deficits as the causes of the stress in the economy.

The report also noted that international lending agencies, such as the International Monetary Fund, said the country's international reserves declined to 2.4 months as at the end of June 2008, less than the minimum three months required.

According to the IEA it predicted in early January 2008 that the average inflation rate would increase to about 15 per cent in 2008. The rate of inflation in October was 17.30 per cent, down from 17.89 per cent a month earlier, Dr Grace Bediako, Government Statistician, told a press conference on Friday.

The IEA suggested that the improvement of the economy in the short to medium term period would depend on several factors including moderation of the levels of world oil prices, and the extent of production from newly-discovered offshore oil fields.

Other means to improve the economy would depend on continued strong support by Ghana's development partners through grants and loans, strong financial discipline of government subsides, significant reduction of government waste and above all continuous political stability especially linked to transparent and peaceful national elections in December 2008. Meanwhile the ruling New Patriotic Party (NPP) in its Election 2008 manifesto tagged: "Moving Ghana Forward-Building a Modern Ghana," said inflation had been brought down to 18 per cent in spite of the serious exogenous shocks arising from the steep increases in global oil and food prices.

".(Government has restored macroeconomic balance, low and declining rates of inflation, lower interest rates and a stable currency that has held its own for six straight years," the NPP stated in its manifesto. The party noted that these spectacular successes had engendered growing international confidence in the Ghanaian economy and had made possible the significant inflows of foreign direct investment, particularly in the banking, energy, and oil and gas exploration fields. The main opposition National Democratic Congress (NDC) on the other hand in its manifesto dubbed: "A Better Ghana - Investment in People, Jobs and the Economy," said the NPP government had failed miserably in the management of the economy, employment, the environment, health, education and the utilities services."

The NDC said NPP had not managed the economy well in spite of the party's claims that the economy was on track. "The facts and figures paint a very bleak picture of an economy that is not on track." The Convention People's Party (CPP) in its manifesto dubbed: "New Dawn, New Vision," described the economy growth as uneven which has benefited only a handful of people and companies.

"Growing inequality and diminishing economic opportunities have led to an unprecedented increase in crime, including armed robberies," the CPP noted. 17 Nov. 08

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Postby paabo » Wed Nov 19, 2008 10:49 am

Ghana expects 2008 economic growth of about 7 percent, in line with an earlier target, after exports rose, a Finance Ministry spokesman said.

Last month the country's central bank forecast growth of 6.6 percent. The Finance Ministry in May said it expected growth of 6.8 percent.

``We are looking to achieve our GDP growth target, Kwaku Kwarteng, the government's finance spokesman, said in an interview in the capital, Accra, late yesterday.

Ghana is the world's second-biggest cocoa producer after Ivory Coast and ranks behind South Africa as Africa's second- largest gold producer. In the first nine months of the year cocoa exports rose to $1.16 billion from $910.8 million the year earlier, while gold exports jumped to $1.75 billion from $1.25 billion, according to the Bank of Ghana.

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Postby The Prince » Thu Nov 20, 2008 12:00 am

Business News of Friday, 14 November 2008

Ghana's debt is US$ 7.65 billion

Ghana's debt, including contingent liability from COCOBOD, at the end of last September stood at US$ 7,652.46 million, Dr Anthony Akoto Osei, a Minister of State at the Ministry of Finance has told Parliament.
The debt, he said, was made up of US$3,990.38 for external, including that of the COCOBOD of US$ 118.75 million, and a domestic debt of US$ 3,662.

Dr Osei gave the figures on Thursday on the floor of the House as he answered an urgent question asked by Mr Abuga Pele (NDC-Chiana Paga), in the name of Dr Benjamin Kumbuor (NDC/Lawra Nandom) on what was the total debt portfolio as at October 31, 2008.

Amidst heckling, attempts were made by some Members of the largest Minority National Democratic Congress (NDC) to get the breakdown of the debt, how much of the national debt the ruling and majority New Patriotic Party (NPP) had paid since it came to power in 2001. However, both Mr Freddie Blay, First Deputy Speaker who presided and the Minister advised that the questions be posed "properly" for answers to be provided.

The House also approved the power granted the Minister responsible for Finance by Parliamentary Statute waive such stamp duty on receivables-backed Trade Finance Facility of US$ 1 billion for cocoa purchases by the Ghana Cocoa Board for the 2008 /2009 crop season.

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Postby paabo » Mon Nov 24, 2008 8:55 pm

Ghana's economic bankruptcy exposed -PNC

... deteriorating since 2006 and continued in 2007.
Accra, Nov. 24, GNA - The Peoples' National Convention (PNC) on Monday commended the Institute of Economic Affairs (IEA) for exposing the true state of the economy, which the institute said was deteriorating since 2006 and continued in 2007.

Mr Anbataayela Bernard Mornah, PNC General Secretary in an electronic mail to the Ghana News Agency in Accra, described the IEA's "Annual 2007 Economic Review and Outlook," document as a bold independent identification and diagnosis of the ailing economy. He therefore called on the ruling New Patriotic Party (NPP) to stop white washing the "economic sepulchre," they have created over the past eight-year through misrule and immediately convey a bi-partisan economic think-tanks forum to analysis the true state of the economy.

Mr Mornah said the IEA report also exposes the deception captured in the NPP Election 2008 manifesto, which the NPP trumpeted as classic benchmarks of success in its stabilization of the economy.

The PNC General Secretary said the PNC manifesto dubbed economic prosperity on the other hand have catalogued economic stimulus that would lead Ghana out of this quagmire by growing the economy at 10 percent annual rate through agriculture.

He said the Dr Edward Nasigrie Mahama led Government would also enhance the quality of schools from basic to tertiary, re-aligning courses offered in the universities to reflect the needs of the labour market and industry.

The NPP in its manifesto had claimed a restored macroeconomic balance, low and declining rates of inflation, lower interest rates and a stable currency that has held its own for six straight years. According to the NPP the interest rate front, the Bank of Ghana rate now stands at a mere 17 percent while the 91-Day Treasury Bill rate has declined to 24 percent. This has made it possible to expand total credit to the private sector from 12.5 percent of GDP in 2000 to 28.4 percent of GDP in 2007.

The NPP claimed that with the cost of borrowing reduced significantly, the private sector is now in a better position to access credit to expand their businesses. We have been able to improve our external reserve position as at December 2001, from US$ 253 million equivalent of three weeks import cover to US$ 2.3 billion equivalent of three months cover as at year end 2007.

"The ultimate proof of our superior management of the Ghanaian economy has been our ability to grow the economy, in nominal GDP terms, from US$ 3.9 billion in 2000 to US$ 16.3 billion in 2008," the NPP stated.

The PNC General Secretary said: "IEA has exposed the deception in the NPP manifesto as the report shows that the real GDP, the economy grew at a rate of 6.2 per cent down from the 6.4 per cent recorded in 2006.

"The 6.2 per cent economic growth rate recorded for 2007 was also slightly below the government's target of 6.5 per cent documented in the government budget statement for 2007."

The IEA survey also revealed that the agriculture sector grew at a rate of 3.1 per cent lower than the revised growth rate of 4.5 per cent achieved by this sector in 2006. The growth rate of the agriculture sector was also significantly below the government's target of 6.1 per cent contained in the government 2007 budget statement.

The Cocoa sub-sector declined drastically in 2006 and this decline continued in 2007. The growth rate of 3.5 percent achieved in 2007 was below the projected target rate of 6.0 percent stated in 2007 budget. The forestry and logging sub-sector did not grow as expected, falling marginally from 2.6 percent in 2006 to 2.5 percent in 2007. The fishing sub-sector performed badly with its growth rate declining sharply in 2007.

The growth rate of the industrial sector in 2007 was 6.6 per cent, about one-third reduction from the 9.5 per cent recorded in 2006. The services sector however grew at an annual rate of 10.0 per cent recorded in 2007 much higher than the 6.7 per cent in recorded in 2006.

The government deficits over the last two years (2006 and 2007) and the high deficit for the first six months of 2008 raise concerns about the sustainability of financing government projects. Overall there was deterioration of the performance of the economy in 2007 continuing the deteriorating trend started in 2006 despite the achievement of growth rates of slightly above six per cent, the IEA report indicates.

Mr Mornah said these statistical findings shows that NPP have hit the end of the road and must be voted out of government, for fresh ideas to revamp the economy.

"We need change of government to restore hope to the economy, NPP cannot offer any hope for the future. This is the time for real change to restore real hope. We must vote for Dr Mahama as the next President of Ghana". DA


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Postby NaMrecco$ » Mon Nov 24, 2008 11:09 pm

I DONT GET this..one day its all good, then its all bad ..and its all good ...wtf... what is this??? light off economy or wat??
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Postby paabo » Fri Nov 28, 2008 11:39 am

Economy Still Robust — World Bank, Others Declare As Baah Wiredu Honoured

The World Bank, the International Monetary Fund (IMF) and the International Finance Corporation (IFC) have said that Ghana’s economy is still robust and can withstand any likely difficulties from the fallout of the world economic crisis.

The three institutions, however, stressed the need for the country to focus more on domestic revenue mobilisation.

At the launch of the Kwadwo Baah-Wiredu Finance and Economic Journalist of the Year Award and economic seminar series in Accra the institutions called for more expenditure control in government business.

The Country Director of the World Bank, Mr Ishac Diwan, said the world financial crisis was likely to threaten development in most emerging economies.

He cautioned that the fall in commodity prices would have a negative impact on the country’s economy and, therefore, called for an alternative and more proactive way of mobilising local resources for the economy.
The Resident Representative of the IMF, Mr Arnold McIntyre, said the good news for Ghana was that the country was not as exposed as some Eastern European countries, most of whose economies were linked to those of the developed nations.
He added that the flow of foreign direct investments would slow as a result of the credit crisis because some foreign business partners might fail to get access to funding to complete agreed deals.

Mr McIntyre also said remittances from the Diaspora would decline because of likely economic contraction and unemployment in the industrialised economies.

He said Ghana was likely to experience a reduction in exports, which would result in lower income by 2009.

The Country Manager of the IFC, Imoni Akpofure, said the best Ghana could do in the midst of the global crisis was to prepare for any negative effects, adding that what experts had been able to do so far was guess what would happen next.
She said the real problem in Ghana was the absence of domestic and global credit for small and medium-scale enterprises (SMEs), adding that although Ghana had been insulated from the crisis, banks were no longer prepared to risk lending to new companies.

International donors, she said, maintained that they would honour their commitments but it remained to be seen how long that would continue as their economies shrank.

The Minister of State at the Ministry of Finance and Economic Planning, Dr Anthony Akoto Osei, said the ministry had put in place measures to cushion the economy until 2010 when the expected oil revenue would begin to flow.
He said those measures included reducing government expenditure and domestic borrowing and focusing on domestic resource mobilisation.
The minister said while the country should cut spending by the ministries, departments and agencies (MDAs), it also had to maintain investment in infrastructural projects.
He concluded that politicians must decide between investing, for example, in education, and offering tax cuts, saying it was up to Ghanaians to choose what to prioritise.

Announcing the Kwadwo Baah-Wiredu Finance and Economic Journalist of the Year award, Mr Diwan and the President of the Ghana Journalists Association (GJA), Mr Ransford Tetteh, said the award was in recognition of innovation and excellence in finance and economic journalism.

The chairperson, Ms Ajoa Yeboah-Afari, said the late minister was liked and admired by all and that many had a lot of stories to tell about the late minister.

In his goodwill statement, Mr Tetteh said the award would lay the foundation for good economic journalism in the country.

“The late Baah-Wiredu was willing to speak to any journalist at any time and also made sure that he spoke to the understanding of the general public,” Mr Tetteh stated, adding, “This made him one of the finest ministers of our time.”

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Postby The Prince » Fri Nov 28, 2008 4:52 pm

$occerMan wrote:I DONT GET this..one day its all good, then its all bad ..and its all good ...wtf... what is this??? light off economy or wat??

SoccerMan, I don’t how much you know about economics, but one thing I can tell you is that Ghana’s economy as of 2008 is not growing. If anything, it has been stagnant or on decline since 2006; based on information from the above articles.

I have said this before elsewhere, and I will say it again. The IMF, the World Bank, and IFC in the latest article also stressed the same point which Paabo highlighted; Ghana needs to focus on domestic revenue generation. I can not stress how important this point is.

According to Mr. Ishac Diwan “… the fall in commodity prices would have a negative impact on the country’s economy and, therefore, called for an alternative and more proactive way of mobilizing local resources for the economy”. Ghana exports a lot of commodity items, and the fall in their prices means Ghana is not gaining as much from exports. Another point is the new Ghana cedi. The value of the cedi is higher than the older cedi. This means Ghana’s exports are now expensive, so people will not buy as much from Ghana as they used to.

Mr. Ishac Diwan noted that “the flow of foreign direct investments would slow as a result of the credit crisis because some foreign business partners might fail to get access to funding to complete agreed deals”. This again is going to have a negative impact on Ghana’s economy because FDI’s (or Investments) are low. That is investors are not investing in the economy as they would like to even though it is profitable to invest in Ghana. This is an external cause which Ghana’s has no control over. This is not the government or the administration in charge’s fault. This is part of the inter-connectedness of the World’s economy.

Imoni Akpofure stated that “the real problem in Ghana was the absence of domestic and global credit for small and medium-scale enterprises (SMEs), adding that although Ghana had been insulated from the crisis, banks were no longer prepared to risk lending to new companies”. Here again we see the importance of generating domestic credit. The lack of credit will lead to small and medium scale enterprises shutting down or laying off workers (if they do hire any workers). Small and medium enterprises should be a major part of Ghana’s economic growth.

Dr Anthony Akoto Osei, said the ministry had put in place measures to cushion the economy until 2010 when the expected oil revenue would begin to flow. Seriously.., we have no plans until 2010?, when oil revenue will begin to flow? And how sure are we of this oil revenue to resolve our money needs.

Ghana should not be a poor country; we should not be depending on donors and aide. Come on people, we have gold; we have timber, and now oil, not forgetting about the bauxites and the manganese’s and the best fertile land for agriculture. But who owes all these resources? Is it Ghana? I doubt it is. If we did own everything we have we will be able to generate the needed domestic revenue. We will not need to depend heavily on external sources.

These neoliberal economic policies will not lead us to the promise land because it’s not what we need. Ghana’s economy is not at the point where we should be experimenting with neoliberal policies, but I will not go in details on that as I will leave the issue for some other time.

It is not too late to make the right decisions. We need policies that will generate revenue domestically. A good system of taxation, accountability, and transparency will certainly be a good place to start.
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Postby The Prince » Tue Dec 02, 2008 1:29 am


Ghana is losing opportunities to participate in the global economy and create jobs for our people due to poor leadership and management.

In a posting on the Ghana Leadership forum we read this from Osofo Rev. Albion Mends Jr., we read:

Hearne Christopher Jr.: Drop unveils a taste bud sensation right out of Wonderland

In another life, Fast Eddie Crane must have been a mad scientist — no, really… Earlier this year the bartender extraordinaire turned owner of the Drop in Martini Corner introduced Kansas Citians to edible cocktails that look a little like sushi and taste a little like dessert. If that sounds a bit out there, wait until you hear what he has up his sleeve this time out.

“As proud as I am of the new edible cocktails, we have a new cocktail we’re launching that I think blows edible cocktails away,” Crane says. “It’s called miracle fruit, and it’s a small West African berry that you chew. It has the supernatural ability to rewire your taste buds. So like a lemon tastes sweet — I swear — you can peel and eat a lemon and it tastes like the sweetest candy you ever had. Or like balsamic vinegar tastes like smoky molasses. You drink a Guinness and it tastes like a chocolate milkshake. It reminds me of some kind of ‘Alice in Wonderland’ stuff. You go through a taste looking glass.” Here’s the deal.

“It has nothing to do with how you feel, it only affects your taste buds,” Crane says. “Depending on how much you have, it lasts 30 minutes to an hour. Then you go back to normal.”

The magic berry is served up alongside a sour-beyond-belief drink called the Miracle Fruit Martini for $15.

“It’s so sour,” Crane says, “it makes your eyeballs wrinkle.”

That is if you fail to first consume the miracle fruit.

To that end, The Drop will offer a sampler plate of odd-tasting foods for MFM drinkers to sample.

“What I’m selling for $15 is not one cocktail,” Crane explains. “I’m selling a half-hour experience. You know, if your date has garlic breath you can make out all night.”

Posted: Albion Jr. Mends, Wednesday, November 26, 2008 4:13 AM

Subject: RE: asaba oooo (asaa)!!!! Attention!!!

**************** I posted a short comment and reproduce an edited version to share:

Yes, we have heard of the magic fruit, published elsewhere before, but is anybody taking capitalist advantage to grow it in commercial quantities?

Ghana and Africa has so much potential. This Asaa fruit can be chemically studied and chemicals synthesized, in Ghana at CSIR if men like Prof. Mike were given the funding and paid to work in Ghana at decent pay. If you take 100 Scientists and pay them $100,000 per year, in 2 years that expenditure is only [200,000 x 100] =$20 million and I can bet my last dollar Ghana will come out with at least a couple of Viagra™ -type of medicinal or Bio-Chemical products that can be marketed globally and earn Ghana over $10 Billion! Won’t that $20 million investment be better that a $50-60 million presidential mansion? In Ghana Ministers and executives will die before they allow another Ghanaian to earn $100,000, even if the person is earning $150,000 in America! (But they will easily pay an American white man that money! Stupid!). Well, let them sit and ruin the nation in their envy and ignorance!

The makers of kote-denden aduro, which they now call Viagra™, in America, is a native Science that has been known in Ghana for ages. The product, once synthesized and manufactured as capsules, has earned over $100 Billion since the product came out a few years ago! Folks, let us remember knowledge that is not marketed is only good for the shelves – useless! An Engineer or Scientist is only as good to society as the society and opportunities in which he lives!

Those in farming – do it! Don’t wait for the Chinese to come and exploit it. There are so many opportunities that Ghanaians sit and wait on! Of course venture capital is a problem as lenders are charging 39% and 49% interest and want collateral.

The American government gave $547 million as MCA grant to Ghana to help small farmers and entrepreneurs, and to date, in 2 years, the government has not disclosed to the public and listed openly for all to see, any disbursements. Recently the government announced 210,000 people are to be given $15 per month starting the month before the 2008 elections! Folks, let’s face it. The NPP could have made a major improvement in ordinary peoples’ lives if they disbursed the money, say $500 million of it in giving loans of say $10,000 average. (Some will get more and some don’t need the full amount, but on average). We can hire some MBAs and people with good solid small business management experience to manage such funds and help small businesses design Business Plans that will work for them. That money could provide venture capital loan, at say only 10% interest, to 50,000 Ghanaians! Every one of them would employ say about 5 workers, and that would have a major impact on the economy if 250,000 people in Ghana have decent jobs or sources of income!

The interest collected will be $50 million per year, which could them be used to help finance more people (or part used to build Presidential mansions! Our Presidents should EARN their pay first by working for it!). Some of the women selling plantain are able to survive with only a loan of $500! So give them a $1,000 and they are happy survivors! That would change peoples’ lives if the government executive and management were honest to help these poor people. Of course we should never forget to manage them – and that is why I call for the MBAs to get “their share” and a couple of ICT professionals, perhaps one or two Lawyers, can design a simple Database Management system, Contracts, Training programs, so people will not take the money and think it’s a Christmas gift.

This indictment is not for the NPP alone, but the NDC as well as the PNDC. Every government does their best, and we all know the NPP has done their part. However, perhaps their best may not be good enough considering the loans and grants they obtained! There are many Ghanaians and well wishers who wished the NPP good luck in 2000. However, I am sorry to state that evidence like these lost opportunities, inability to deliver even water through pipes when given $603 million to perhaps $1 Billion in grants and loans, seems to support a clear common sense conclusion that the NPP must be a very corrupt and mismanaged party and organization. There is no doubt the NDC was also corrupt since they also supervised the deterioration of Ghana for even a longer time and left us with $6.2 Billion in accumulated debts! When all is said and done, the people voted the NDC out, with hope in Kufuor and his NPP. It is this writer’s gut feeling that one day President Kufuor and his Ministers and executives will be called to answer, no matter what happens in Ghana!

Kwaku A. Danso, PhD

President, Ghana Leadership Union, Inc (NGO)

Livermore, CA. 94551, USA

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Postby paabo » Tue Dec 02, 2008 2:00 pm

Where are all the NPP loud mouths on this forum?

Have they not seen this or are they conveniently ignoring bare facts like these?

The fact that you support a particular party does not mean you must not comment on areas where they are failing or deemed to be doing so! :idea:

However, perhaps their best may not be good enough considering the loans and grants they obtained! There are many Ghanaians and well wishers who wished the NPP good luck in 2000. However, I am sorry to state that evidence like these lost opportunities, inability to deliver even water through pipes when given $603 million to perhaps $1 Billion in grants and loans, seems to support a clear common sense conclusion that the NPP must be a very corrupt and mismanaged party and organization.
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Postby paabo » Thu Dec 04, 2008 9:26 pm

IEA disputes NPP growth ‘miracle’

The Institute of Economic Affairs (IEA) has described as inaccurate claims by the ruling new Patriotic Party that the size of the Ghanaian economy has quadrupled over the last eight years.

According to the economic think-think, the real size of the economy has grown by 54 percent contrary to the 300 percent put out by some politicians.

GDP is the sum of consumer expenditure, business investment, government expenditure, and net exports. Nominal GDP (also called money GDP) is a measure of money spent. Real GDP corrects the gross nominal GDP figure for inflation, making real GDP more useful for historical comparison.

The NPP’s vice presidential nominee, and former deputy governor of the Bank of Ghana, Dr Mahamudu Bawumia has said the economy has grown by a multiple of four since President Kufuor assumed power, saying the national income is about $16bn.

But an analysis of the growth of the economy by the IEA puts the real gross domestic product (GDP), which is a measure of economic growth at about $2.7bn in 2000 and about $4.1bn in 2008, representing a growth of 54 percent.

In an interview with Joy News, the head of the economic unit at the IEA, Dr Kwabena Anaman, said growth of an economy is measured by “real gross domestic product” which currently holds only 54% for Ghana.

He maintained that the figure put out by Dr Bawumia was the “nominal gross domestic product” which has inflation as a determining factor.

“The economy has expanded by 54 percent in real terms; the 246 percent that is being ascribed…is just increases in prices, and that is what we are trying to correct,” he stated.

The economist said the 246 percentage figure is only a nominal figure and does not represent the real issues on the ground.

“If you want to measure real GDP, you have to factor prices out “and we use a base year, and if you use a base year of 2000 and give it a figure of 100 the current volume of production is 154 so it’s gone up by 54 percent and not 300 percent,” he stated.

On per capita income, which is the average income for each person in Ghana, Dr Anaman said calculations are based on real GDP and not the nominal figure.

“No country can quadruple its real GDP in eight years, it’s not possible,” he said.

Joy News' interview with Dr Anaman

Story by Fiifi Koomson
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Postby *STOMP* » Thu Dec 04, 2008 10:20 pm


Yoofi Grant, IEA refute Dr Anaman's claims on economy

The campaign director for Dr Mahamudu Bawumia, vice presidential candidate of the ruling New Patriotic Party (NPP), Yoofi Grant, has described as ridiculous assertions by the head of the economic unit at the Institute of Economic Affairs, Dr Kwabena Anaman that the running mate erred in economics when he said Ghana's economy has quadrupled over the last eight years.

Based on what he said was an analysis of the economy, Dr Kwabena Anaman said the real growth of the economy was 54 percent contrary to the 300 percent put out by the vice presidential candidate.

Dr Bawumia put out the figure during the vice presidential debate organised in November by the IEA in Cape Coast. He put the national income at $16bn but Dr Anaman said the figure is only nominal and does not represent real economic indicators.

In a sharp rebuttal, Yoofi Grant said he found the assertion a “ridiculous attempt to impugn that Dr Bawumia doesn’t know what he’s talking about.”

He said Dr Bawumia had been speaking in nominal terms and could never have erred as such figures could never have been forged.

“We work with nominal figures all the time and we understand what we mean when we say nominal figures,” he said.

Mr Grant said growth has never been restricted to real terms and that describing the country’s performance in nominal terms could never have been wrong.

He stressed that it was “intriguing” that a member of the IEA which sponsored the recent presidential and vice presidential debates would throw out such comments.

Describing the statement as divisive and “embarrassing to the IEA,” Mr Grant maintained that such trends in the institute’s position would rather provide fodder for attacks on the ruling party, especially in the run-up to a major election.

Meanwhile, the IEA has distanced itself from Mr Anaman’s comments, saying those comments represented his personal views and not the position of the institute.

Listen to Mr Grant's comments on the matter in the attached audio.

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Postby The Prince » Wed Jan 07, 2009 6:05 pm

General News of Wednesday, 7 January 2009

WB paints gloomy picture of Ghanaian economy

The World Bank has painted a gloomy picture of the Ghanaian economy, saying that the macro-economic situation that the incoming government will inherit is “extremely worrisome”.

In a January Report signed by the bank’s Country Director in Accra, Ishac Diwan, and copied to the Minister of State at the Ministry of Finance and Economic Planning, Dr Anthony Akoto Osei, and the Governor of the Bank of Ghana, Dr Paul Acquah, it warned that the incoming administration would inherit high fiscal and balance of payment deficits that were unsustainable, given the current state of international financial markets.

Quoting mid-December data provided by the Bank of Ghana and the Ministry of Finance, the World Bank said in the coming years, the country would have to spend 14 per cent of its total Gross Domestic Product (GDP) to service its fiscal deficit, while the balance of payment deficit would be larger.

In that circumstance, the Bank predicted a “socially painful financial crisis” if urgent steps were not taken to reduce the twin deficit.

It explained that in the past, the fiscal deficit had been financed from proceeds that accrued from the privatisation of state assets and the leftovers of the Eurobonds issued in 2007, while the current account deficit was financed with foreign reserves.

However, it said, those sources were no longer available. The World Bank pledged to support the new government to, among other things, address the macro-economic imbalances, attain macro stability and protect the poor and the vulnerable in Ghana.

Towards effecting that assistance, it disclosed that Ghana had a generous IDA allocation of about $450 million per year and a large IDA portfolio that the bank could help to “front-load” for urgent use.

Furthermore, it revealed that it had developed fast-track procedures to support countries that had been hit by the international financial crisis and which could be applied to Ghana.

The World Bank also pledged its preparedness to continue the analytical work it had already started with the outgoing government for the effective use of the anticipated revenue from the country’s oil find.

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Postby paabo » Fri Jan 16, 2009 10:38 pm

...Transition Team comments on macro-economic situation

Accra, Jan. 16, GNA--The Economic Sub-Committee of the Government Transition Team, after having studied the nation's current macro economic situation have noted the remarks made by the Minority in Parliament and will respond to the issues raised in detail in the course of next week.
A release issued by Hanna S. Tetteh, Spokesperson, President John Atta Mills Transition Team in Accra on Friday said, the Team's statement will provide the context for the detailed response and the public will be more enlightened on the prevailing state of affairs.

The main points in respect of the nation's current macro-economic situation are as follows:


In a word, the government of Ghana is "broke".

In 2008, government projected that it would spend GH¢168,127,900.00 (approximately GH¢168.1 million) more than it would take in as revenue. That was the projected deficit for the year. Instead, it spent GH¢1,340,196,800.00 (or GH¢1.34 billion) in excess of its revenue. In other words, the governments overshot its projected budget deficit by 697.1% in 2008.

This translates into a deficit-GDP ratio of 13.42% - the highest in over 10 years. It also puts a severe strain on government's finances in 2009, including its ability to provide essential developmental projects and social services. Whereas when the NDC left office in January 2001 the GDP deficit ration was 9%.

The dire financial situation means that it would be very difficult to implement the salary increases announced by President Kufuor on the eve of his departure as this would create severe challenges for the economy.

On the external front, the merchandise trade deficit has ballooned as imports continued to outstrip exports, thanks to increased donor inflows to pay for imports without corresponding increase in export earnings.

In 2008, merchandise imports were estimated at US$8.63 billion, compared to merchandise exports of US$4.97 billion.



Reckless election-year expenditures: For example, by the end of the first 9 months of 2008, several ministries had over-spent their annual budgetary allocations for salaries and benefits by between 76.0% and nearly 270.0%.

Increase in Petroleum prices on the World Market: The rapid rise in petroleum prices on the world market increased the nation's oil import bill, particularly for VRA, leading to unplanned government expenditures to the energy sector.

Residual Effects of the Energy Crises: The failure of the government to fully resolve the 2006-2007 energy crisis only aggravated the situation.

Shortfall in the Expected Returns on Investment from hosting CAN 2008: The flaws in the procurement process for the construction of Stadia and hosting the games which have resulted in cost overruns have created difficulties. This has been exacerbated because the "large number of visitors" that the government expected for the tournament did not materialize and the expectations in respect of revenue generation for the stadia have not been met.


There were weaknesses in key sectors of the economy.

There was a decline in investment in the manufacturing sector of 2.3% and a decline of 15.0% in the electricity and water sectors.

Most of the "macro-economic stability" trumpeted by the NPP was due more to increased donor inflows, which gave us the dollars to support the cedi, rather than being the result of vigorous growth in the economy and in exports.

Merchandise Exports as a share of total economic output between 1993 and 2000 under the previous NDC administration rose from 17.8% to 38.9%. After the NPP took over, this figure declined steadily, to 28.7% in 2000. As a result, once donor inflows and foreign remittances slowed down, the economy was incapable of sustaining itself (because of low levels of foreign exchange earnings). Consequently, between December 2007 and December 2008 alone, the cedi lost about 20.0% of its value against the dollar.
When one compares the economic situation between what obtained in years 1999- 2000 to the period 2007- 2008, in other words the last two years of the NDC administration compared to the more recent last two years of the NPP administration there were critical differences. Between 1998 - 2000, cocoa prices fell from US$1,645 to US$1,094 per ton, a cumulative decline of about 34.0% percent. Further, there was an increase of over 90% in oil prices and a decline in Gold prices. The rapidly rising oil prices resulted in a higher import bill and declining earnings from the nation's principal export led to a depletion of Ghana's international reserves.
Comparatively the NPP administration faced no such threat. In 2008, cocoa prices passed the US$2,000-a-tonne mark, leading to large gains from cocoa exports - enough to off-set the effects of higher oil prices and maintain the economy on a sound footing.

This did not happen. The result is a twin crisis of a growing budget deficit and a worsening trade deficit, which the NDC will have to tackle against a background of rising public expectations, and commitments that it intends to work hard to keep within its four-year term of office.


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Postby paabo » Sun Jan 18, 2009 4:18 pm

Kwesi Botchwey speaks on Ghana's economy

Dr. Kwesi Botchwey, Ghana's longest serving Minister for Finance and Economic Planning has called on Ghana's politicians to be honest about the facts of the country's economy, and stop the blame game.

The man who managed Ghana's economy for 13 years from 1982 to 1995 says the matters which the World Bank Country Director, Ishac Diwan had put out in the economic outlook on Ghana recently is not a secret, the issues have been known, it has been in the public domain for a long time, he said.

Dr. Kwesi Botchwey made the remarks on TV3's Current Affairs show, Agenda, Thursday January 15, 2009 and was monitored by ghanabusinessnews.com.

He argues that “it is not entirely correct that these issues have not been in the public domain. All the facts that the World Bank is putting out now have been known.”

Dr. Botchwey was dismayed that the debate about the economy has been politicized. “Unfortunately, these debates have been politicized, and it must be depoliticized,” he urged.

Yes, there has been growth, I think that the NPP administration must be congratulated for stabilizing the macro-economic environment, it is true that interest rates came down, it is true that inflation came down, but it is also true that over the past year, especially, there have been deterioration and that must be admitted,” Dr. Botchwey stated.

According to Dr. Botchwey, “the deficit has grown, the national currency has depreciated, it is true that there was pressure on our external accounts, and there is pressure on imports and our international reserves have gone down.”

He said any professional who looks at the economic performance record of the past year would have to admit that there has been deterioration.

He referred to a lecture at the University of Ghana recently by a former Vice President of the World Bank, Dr. Gobind Nankani in which he pointed out these same issues in even gloomier pictures. He said even though, this was published by the Daily Graphic newspaper, there was never a national debate on the issue.

He also said these issues were outcomes of discussions the IMF had with the government.

He pointed out that the government is like an individual, and a person cannot live beyond what he or she earns unless someone gives you money or you borrow, but as a government you have to borrow money or print more currency.

As a country Ghana spends much more than it earns in revenue.

And from the facts and figures available, the country's deficit has surged in the last year and it is poised to go up in 2009.

Dr. Botchwey advised that as a nation we need to discuss this debate dispassionately and leave the World Bank and IMF out. “There is not much sense in shooting the messenger.”

“Let's ask ourselves, is what they are saying true? Forget who is saying it. Because these things have implications for the kind of policy mix we have to adopt for the next four years,” he said.

“Indeed, this new government, together with opposition would have to work together to find the right mix of economic policies,” he added.

Reminiscing on the economic history of Ghana when he was Finance Minister, Dr. Botchwey said, “most people today have forgotten what the economy was in 1982 when we started. People queued to buy uncooked kenkey, there were bush fires, most of the banks were bankrupt and inflation was running at 120%, we had large arrears of debt, we owed Nigeria almost $600 million of oil we had bought. One million Ghanaians were deported into Ghana from Nigeria and Cote d'Ivoire at the height of the economic crisis.”

“Stabilizing the macro-economy was very important, at that time, balancing the budget and providing incentives for people to work,” he said.

He said “at that time the cedi was not convertible and we had to establish the interbank market, introducing the Forex Bureau, and capital market. We had to establish a new prudential environment for the banks to function. We also laid the foundation for liberal economic development in those years.”

In response to a recent report of the World Bank that the previous government spent more than they had earned, over 14% of GDP.

Indeed, inflation has risen to 18.1 percent as at December 2008.

Dr. Kwesi Botchwey, who once taught at Harvard Centre for International Development, now teaches at Tuft University, he teaches a course titled, Managing Economic Reform in Low Income countries.

On the recent elections which went into a run-off and created tension in the country, Dr. Botchwey said, “I have abiding faith in the good sense of Ghanaians. It was just a trifle kind of excitement, even though I worried that there would be some violence, but I'm glad we overcome the tension.”

“We can pat ourselves at the back that our institutions worked,” he added.

Dr. Botchwey who considers himself a consummate patriot said he would be keen on seeing how the country goes and he would be interested in offering advice when required, but thinks there are a lot of fresh talents and new faces around who should be given the opportunity to serve, “and we the old dogs sit in the background and offer advice,” he said.

Commenting on the global credit crunch, he disagreed with those who claim that Ghana's economy is resilient and therefore, would not be affected.

He said Ghana would feel the effects if the downturn continues. He said remittances from Ghanaians abroad would go down, because if Ghanaians abroad lose their jobs, remittances would reduce, if there is less demand for Ghana's exports, like gold, diamond bauxite, manganese and cocoa, that would affect the country's export earnings.

Aid flows he said, would also be affected. He also warned that, if the recession eats deep into the industrialized world, access to loans would equally be affected, and so it is necessary to correct the macro-economic environment instead of blaming others.

On Ghana's oil find, he said some people are behaving as if this is a huge bonanza that would solve all of the country's problems. He said, “there have been new findings and therefore, the numbers should be revisited.”

“This”, he warned “is not a huge bonanza, in any case production is not going to start until 2010 and the reserves may be treated by 2030.”

According to him, “the estimates we have on a cumulative basis will be about $20 billion, about a billion dollars per year, which is 10 percent of the budget, and it is insignificant. It is not going to solve our problems, it might even aggravate our problems.”

The oil find, he said could be the reason for the intense political jostling the country experienced during the 2008 elections.

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Postby Fatso » Mon Jan 19, 2009 6:05 pm

Paabo, you apparently are seriously challenged when it comes to the subject of economics. Anybody can take a look at an economic situation and spin it dismally or positively. The NDC are only 'preping' us for more austerity. There is nothing new about the way the neo-colonialist Ghanaian economy operates. It is the same neo-liberal nonsense that is shoved down our throats by the Bretton-Woods institutions. If you take a look at the United States, you should realize that their finances are so out of order. The U.S spends far more than it receives from taxes and other revenue sources. However, the U.S is still spending; and they don't intend to do any retrenchment on the items of their expenditure that bleed their economy -- excessive spending on defense, corporate welfare. The interesting thing is nobody can force them to put their financial house in order. When it comes to weak-arse countries such as Ghana, the little indication of financial excesses generate knee-jerk reactions. Our stupid politicians and the criminal world bank/IMF experts do not come out to express concern about lack of adequate health care, poor nutrition, lack of quality education and overall poor quality of life. Instead, they spew garbage about macro-economic indicators that are so arcane and irrelevant to the real quality of life for majority of ghanaians. The macro-economic indicators only serve as benchmarks for parasitic finance capital to determine if Ghana has enough blood for it to come in and suck. It is so sad that some of you NDC sycophants and idealists are still drinking the Kool-Aid.
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Postby paabo » Tue Jan 20, 2009 12:25 pm

Meeting Challenges of Ghana's Economic Growth

The World Bank says Ghana appears to be a prime candidate for scaling up donor financial support to accelerate growth and the achievement of the Millennium Development Goals (MDGs) since her policies have been good and its institutional capacity continues to improve.
Excerpts of "Ghana's Economic Memorandum" prepared by the Bank in 2007 and made available to the GNA on Thursday, however, said there were clear bottlenecks in the provision of public goods, such as infrastructure that threatened the ongoing economic expansion. It said additional donor resources combined with better policies and capacity could mitigate these problems and accelerate the achievement of the MDGs.

The memorandum said: "Ghana has demonstrated its ability to absorb substantial amounts of aid relatively effectively. In addition, public resource management has been improving.

"This trend suggests that the absorptive capacity of the economy is not likely to constrain greater and productive use of additional resources in the future, including in the form of aid. Some further scaling-up of aid to Ghana is both desirable and possible, with no adverse effects on competitiveness and no strain on its absorptive capacity, the memorandum said.

It said from the Ghanaian side, such scaling-up of resources must be matched by continued improvements in policies and a value-for-money approach to public sector expenditures.

Giving a historical background the memorandum said on March 6, 2007, Ghana celebrated the fiftieth anniversary of its independence with strong growth, continued poverty reduction, and renewed optimism about its future.
The country's present determination to reach middle-income status is reminiscent of the optimism and self-confidence that characterized the mood of its original independence celebrations in 1957. At the time of their independence, Malaysia, Mauritius, Singapore, and South Korea were broadly on a par with Ghana in per capita income terms.

These other countries have long since reached--and some have surpassed--middle-income status. For example, with a 2005 Gross National Income (GNI) per capita of $15,840, South Korea is a high-income country, and with $5,250 GNI per capita, Mauritius is upper-middle income. In contrast, despite all of its natural and human resources and favorable coastal position, Ghana lags behind with a 2005 per capita GNI of $450.

A longer-term perspective raises inevitable questions. What went wrong in the early decades? More importantly, what is the basis for today's renewed optimism? Focusing on the most recent growth, what are the sources of its acceleration and poverty reduction, and how sustainable is the growth momentum? What holds Ghana back from reaching even higher, better, and faster on the road to middle-income status? What kind of strategy and policy should Ghana and its partners pursue to achieve key development objectives? Finally, where is Ghana expected to be in 2015 in terms of income, poverty reduction, and the main Millennium Development Goals? These are the questions, in one form or another, on the minds of many Ghanaians and the development community at large.

First 25 Years after Independence
The first half of Ghana's 50 years of independence could be characterized by political instability, mixed development paradigms, and policy reversals. Ghana's long-term economic performance in the early independence years was closely associated with cycles of political instability and shifts in policy regimes, including changes in strategies between state-led and market-led development. The impact of dirigiste state-led policies in the First Republic (1957-66) compounded by the fall in the price of cocoa resulted in significant deterioration in internal and external balances and in the overall economic situation. The following years (1966-72) were characterized by political turmoil and short-lived reforms followed by a period of economic chaos until the early 1980s. Overall, during its first quarter-century of independence, the political and economic policy environment of Ghana was not conducive to dynamic private sector investments, entrepreneurship, and growth. However, since 1983, Ghana has entered a period of relative political stability and gradually improving policy and growth performance. With improved policies, the country also began to receive increasing amounts of financial aid. More recently, since 2000, Ghana has significantly improved its macroeconomic management and economic performance.
Slow Start
Its slow start after independence set Ghana back in its race with many other Sub-Saharan African and low-income countries toward long-term growth. Its real per capita annual income growth average over those 50 years has been well below 1 percent. Furthermore, real per capita income has barely doubled over the last 45 years. In contrast, during the same period, with its aggressive export-oriented strategy, Mauritius has sustained average annual per capita growth of above 3 percent, and its income level has almost quadrupled.

In a welcome development, since the 1990s, Ghana's economy has begun to advance. Ghana has sustained real GDP growth of above 4 percent and per capita growth of approximately 2 percent. These figures have elevated Ghana toward the medium growth performance among African countries over this period. The Government of Ghana (GoG) now explicitly aims to achieve middle income status by 2015, with an annual GDP growth of 6 percent to 8 percent.

Impressive Gains but Many Constraints Remain
Ghana has recently achieved impressive gains in growth performance and poverty reduction. Improving the policy environment was a major contributor to this success although a benign external environment in terms of agricultural export prices has helped. Economic growth has averaged over 5 percent since 2001 and reached 6 percent in 2005-06. This strong growth nearly halved the poverty rate in Ghana--the proportion of the population below the country's poverty line--from approximately 52 percent at the beginning of the 1990s to 28.6 percent in 2005-06. As a result, Ghana is well ahead of schedule in achieving the key poverty Millennium Development Goal (MDG). In the low-income African context, this achievement is remarkable. Significantly, it is built on the foundation of the improved economic policy environment--based on sound fiscal management--and investment climate, rising private investments, and aid. Alongside Tanzania and Uganda, Ghana is one of the three strongest economic policy performers among low-income African countries.

Growth in all Sectors
All sectors of Ghana's economy--especially rural areas--participated in growth. This shared growth was key to the rapid pace of poverty reduction. Rural incomes rose because of greater use of land as well as some productivity gains and higher agricultural export commodity prices. Private, small-holder cocoa farmers were a major beneficiary of rising rural incomes. There are additional reasons for guarded optimism about Ghana's agriculture, as evidenced by the recent success of the horticulture sector (for example, pineapple). Agriculture has the potential to further grow, but it must be supported by improved policies, institutions, and investments. Ghana's large services sector has also grown on the heels of a better climate for private business and investments and rising incomes. The small industrial sector also has shown dynamism, albeit from a low base. Finally, responding to the more favorable economic climate, Ghana's exports have grown, including nontraditional exports.

Human Development Indicators
Some human development indicators improved, and aggregate employment increased, although much of it was in the informal sector. However, while Ghana did well in primary education in terms of enrollment, ensuring that children stay in school and make progress has been a challenge. Secondary and university education has not always provided the skills needed by the growing economy. And rural-urban migrations continue unabated, putting pressure on the already high urban unemployment.

Income Inequality
Despite these gains, income inequality across regions and between men and women remains high and has increased during this period of accelerated growth. These inequities remain potent sources of political and social tensions. While all main income groups--from the poorest to the richest--have benefited from the economic expansion since the beginning of the 1990s, the gains by the poorest were much lower than those of the rest of society. Despite their major role benefiting the society, women continue to earn much less then men, and poor women are the most economically vulnerable. While all regions saw gains in incomes and a reduction in poverty, these gains and poverty reduction were much less pronounced in the North of Ghana.

Management of Aid
Ghana's good overall performance has attracted rising amounts of better-managed aid. Ghana now receives annually approximately $1 billion in various forms of aid, and aid is now more effective than in the past. A lot of aid went into some key sectors such as roads and as a result, the quality of roads in Ghana now is much better. Also, donors are now "harmonizing" aid among themselves and are closely aligning it to Ghana's social and economic priorities.

Annual external reviews of Ghana's public financial management note continuous improvements. This good management is one reason that the large volume of aid in Ghana has not resulted in significant downside effects, such as overwhelming the local institutional capacity and reducing competitiveness of Ghanaian products. Aid could be even more effective in the future if it were more predictable and better geared toward identified growth constraints.


What are Ghana's main constraints now to even more rapid growth and poverty reduction? This report identifies three major constraints that, if eliminated, would help Ghana sustain and accelerate growth and poverty reduction in the future. These constraints are:
Infrastructure gaps, especially in energy and water and sanitation. In electricity, the power crisis with long cuts and large losses is a stark reminder of the gap between supply and demand that threatens the viability of many businesses, especially in manufacturing and services.
In water and sanitation, supply is inadequate and quality often poor. In ICT, interconnectivity remains a problem and the sector is yet to deliver on its promise. Even in roads, the best performing infrastructure sector, there are gaps in rural areas and in connectivity with poor regions. Simply put, Ghana spends approximately 3-4 percent less of GDP per year than is necessary to address the most critical infrastructure gaps in electricity, water and sanitation and, to a lesser extent, in ICT and rural roads. The medium-term shortfall in infrastructure financing is higher--approximately 5-6 percent of GDP. The power crisis is already costing the country at least 1.5 percentage points of GDP per year, and the "silent crisis" in water and sanitation threatens not only economic activity but also public health. .

Productivity remains low, especially in agriculture. .

Ghana's aggregate productivity is improving, but the level remains below the most productive African economies--such as Mauritius and Botswana--and way behind the rapidly growing Asian countries. With irrigation almost nonexistent, Ghana's agriculture still depends largely on weather. Recently, productivity has begun to increase but the use of modern agricultural techniques remains limited. The success stories in Ghana's agriculture, such as cocoa and horticulture (pineapple), provide lessons on how to strengthen the rest of agriculture..

Investment Climate.

While improving, several aspects of the business and investment climate remain weak. These constraints hold back Ghanaian firms from investing, expanding output, and hiring more workers as well as becoming more productive. The most important constraints relate to electricity and access to finance, especially for small and medium-size enterprises.

Looking Ahead

How can these constraints be overcome, and what can public policy contribute? To begin with, it is necessary to continue what Ghana has been doing well, to improve the overall policy environment in at least three areas: macroeconomic policy, especially fiscal and monetary management; efficiency; and sector policies.

Macro Stability

Increasingly, the cornerstone of Ghana's recent macro stability has been prudent fiscal and monetary policies. This stability must continue if Ghana is to further reduce interest rates, increase private investments, and continue to attract favorable investment ratings and donor support. First and foremost, this means sustaining prudent fiscal stance and borrowing levels consistent with debt sustainability. In this context, it is important for Ghana to maintain fiscal prudence over the political cycle and resist two types of pressures. First is pressure for the budget to pay for inefficient tariff policies and energy companies' operations. Second are the pressures to raise the already large government wage bill beyond the levels justified by fiscal affordability and productivity? Increasing the productivity of public sector personnel and using resources more efficiently will be important, hence, the important emphasis should be to improve efficiency and value-for-money at all levels of public sector activities. Nevertheless, while maintaining macro stability is important, it is not sufficient to guarantee accelerated growth.

This requires focusing directly on identified growth constraints, as follows:

Closing the infrastructure gap

This will require urgent efforts by policymakers and implementing agencies on the financing, policy and regulatory and institutional fronts. Specifically, short-term efforts over the next 12 months should focus on:

Eliminating the short-term annual funding shortfall estimated at US$350-430 million (3-4 percent of GDP); and targeting the main bottlenecks in electricity, water and sanitation, ICT, and some rural roads. Funding for this scaling-up in infrastructure could come from a combination of domestic and external resources, preferably on concessional term.

Accelerating tariff reform toward average cost recovery while safeguarding the poor's affordability with a suitable design of "lifeline" tariffs or alternative ways of striking a balance between revenue and social concerns in tariff policy.

Strengthening regulation and depoliticizing sector management. Ghana must aggressively seek opportunities for greater private participation in infrastructure development, especially in energy and ICT.

Raising Agriculture Productivity
Addressing infrastructure bottlenecks will also help raise productivity in the economy. Without water supply and electricity, there is no refrigeration; and without refrigeration, there is no vibrant commercial fishing industry and associated food chains. Productivity is fundamental to long-term growth. Some new technologies, such as cellular/IT, offer opportunities to "leapfrog" into higher and more productive, new economic sectors that offer promise of new jobs, investments and growth. Additional opportunities beyond infrastructure must be sought to sustainably enhance productivity in sectors important to the wellbeing of Ghanaians--in agriculture, for example. The most important of Ghana's future productivity improvements are likely to be through the competitive entry of new and more productive enterprises, as well as the growth of existing firms, and through increasing the available skilled labor. To these ends, policy efforts should focus on:

Elimination of Bottlenecks
Eliminating infrastructure bottlenecks and widening the use of technology and ICT transferring to other agriculture sectors the lessons of recent productivity gains in the cocoa sector as a result of disease control, fertilizers, and better product varieties. The last shows that aggressive productivity-enhancing measures on privately owned farms can have major impacts on productivity and output. Introducing in the public sector a new value-for-money and productivity-enhancing mindset that will lead to better use of resources and wider space for private sector innovation in the new technology-intensive sectors that offer opportunities for leapfrogging.

Strengthening the investment climate
Recent surveys including the World Bank's 'Doing Business (2007)' and Association of Ghana Industries (AGI) surveys as well as the most recent World Bank Investment Climate Survey reported in the Ghana CEM indicate that the investment climate is improving and there is investor optimism. However, these are happening from a low base, and there remain serious concerns in at least two notable areas: electricity and access to finance by small and medium-size enterprises. Thus, the improvements in investment climate must be extended and sustained over the long term, especially in these areas. While other areas of the investment climate are much less of a problem, certain business regulations could be improved. For example, procedures for formal business start-ups are still too cumbersome and push firms to informality.

Role of Exports
Exports will need to play an increasing role as an engine of growth and export diversification will need to be promoted. It is no accident that all successful stories of development are linked with rapid and sustained export growth, even in Africa ( Mauritius, Botswana).As a small open economy, Ghana, therefore, must grow not only using its small domestic market but tapping the potential of unlimited global markets. While Ghana has begun to develop non-traditional exports, much more needs to be done. The report details opportunities to expand existing and develop new exports up the value chain but also based on existing natural resources. There are no easy answers here, but one thing is certain: Ghana must avoid the overvaluation of its currency that would hurt export and growth prospects. This is perhaps a central lesson that must be heeded for there is no example of rapidly growing economies with overvalued currency. So far, Ghana has managed this challenge well and it must continue to do so in the future.

Sharing of Benefits
To ensure wider sharing of the benefits of growth, Ghana could well consider more active regional infrastructure policy and greater attention to regional and gender disparities. Effective regional infrastructure policy will require identifying, professionally appraising and implementing regional projects that connect poor regions with centers of the mainstream economy as well as with neighboring countries in the North. With more detailed geographical poverty and infrastructure data now available, greater precision is possible in identifying geographic pockets of poverty that could be targeted by policy aimed at linking those isolated areas with basic services and centers of economic activity. Promoting gender equality in economic opportunities and education must be high on the policy agenda. Also, new growth will increasingly demand more skilled workers and building skills of new generations will be an important element of a strategy for shared growth. The analysis of the political economy in this report also suggests that reforms will work better and will be accepted more widely within society if citizens are more informed about basic policies, key economic and social data, and policy choices.

No Room for Complacency
Against this background, Ghana will continue to face--and will need to manage-- important risks, so there 'is no room for complacency'. The main short term risk is the energy crisis that must be resolved urgently. But there are also macroeconomic, environmental, and external risks to rapid growth in Ghana. As noted,sustaining macroeconomic stability and enhancing public sector capacity and efficiency is a constant must . Environmental degradation also must be dealt with, as well documented elsewhere (Natural Resource Study). Finally, as a small open economy, Ghana remains vulnerable to external shocks over which it has little control: commodity prices, climatic conditions, regional tensions, and fluctuations in global, international trade and investment flows. The best way for Ghana to manage these risks is to build resilience by strengthening its own policies, institutions, and capacity.

Elimination of Constraints
If the above growth constraints are eliminated and policies and institutions strengthened, Ghana faces strong medium-term prospects--but they should not be taken for granted. The report analyzes the medium-term prospects in detail and spells out three possible medium-term scenarios. It should be noted that none of these fairly positive scenarios would materialize if economic policy fails: this Ghana cannot afford.

Under the 'baseline medium-term scenario' with current policies and short-term restoration of the energy balance--which is a must if Ghana is to continue to grow rapidly--but no major additional infrastructure investments, Ghana's real GDP growth could improve to approximately 7 percent. As noted, above, sustaining macroeconomic stability and further enhancing public sector efficiency will be required. This results in the key poverty MDG being achieved well ahead of schedule, possibly by 2008-09. However, the achievement of the other MDGs would be mixed and reaching MDGs on health and water and sanitation will continue to be elusive. The biggest short-term risk to this scenario is the ongoing energy crisis and all policy efforts should focus on this priority.
Accelerated growth scenario
If Ghana manages to close major infrastructure gaps--as advocated by this report--through a combination of additional improvements in policies, and associated efficiency gains (e.g., lower interest rates and higher investments and productivity) and more resources, even more rapid growth and poverty reduction are possible. Additional resources of approximately $350-430 million per year above the Ghana Poverty Reduction Strategy (GPRS II) spending path would be required to close the infrastructure gaps. This scenario envisions increased economic growth (averaging 7.5 percent per annum), somewhat faster poverty reduction, and better MDG performance compared with the baseline. However, some MDGs (especially health and water and sanitation) remain elusive. The analysis shows that the economy can absorb this moderate scaling-up of resources without negative consequences on competitiveness or strain on institutional capacity. Finally, if Ghana manages to improve its policies and capacity even further and mobilizes substantial additional resources particularly directed towards water and sanitation and health, it would be possible to achieve all four key MDGs--poverty, education, water and sanitation, and health; such scaling up would require considerable additional resources that could come from a combination of domestic and external sources.

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Postby *STOMP* » Tue Jan 20, 2009 1:37 pm

:roll: :roll: :roll:

Ghana's economy is soo bad

1.we had the best stock exchange worldwide in 1998(talk about confidence)

2.As at December the cedi depreciated against the dollar by 16% yet the average depreciation against the US dollar was about 21%.Here in the UK it was 27%

3.There were not long lines at filling stations in Ghana

4.The expenditures of stadiums.bui dam etc. was meant to be paid off in a year :roll: :roll: :roll:

etc etc,

Politicians will always like to pull a fast one on the ignorant and it is them that would suggest that a growth rate of about 6% in 2007/08 when other economies where shrinking will mean our economy is bad.

http://www.indexmundi.com/ghana/gdp_rea ... _rate.html
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Postby paabo » Sat Feb 07, 2009 4:35 pm

Economist calls for freeze in public wages

An economist has called on President Mills to freeze public sector wages for the 2009 financial year to ease pressure on the economy.

According to Razia Kahn, Chief Economist for Standard Chartered Bank responsible for Africa, any further increases in wages would put the strained economy completely out of gear.

Public wages is considered to be the highest public expenditure and with the economy said to be suffocating under some 13.3 per cent budget deficit, the economic players are divided over the way forward.

Speaking on Joy FM’s business discussion programme, Business Trends, Kahn noted the decision to freeze wages would be unpopular, but would serve the best interest of the country in the long term.

“There is no point in increasing salaries when those salary increases are just eaten up by inflation. It will be far more sensible to put in measures that will stop inflation in its tracks.

“When a stable macro economic stability is achieved then government can now increase salaries which would be to the benefit of all,” she observed.

Her advice comes in the wake of similar proposal put forward by the World Bank as part of its recommendation in the 2008 financial report which painted a bleak picture of the country’s economic performance in the year under review.

Labour unions have however kicked against the proposal.

Meanwhile, a lecturer at the University of Cape Coast, Isaac Acheampong, said a total freeze in public wages would be unfair.

He called on government to expand its sources of revenue, insisting, workers must earn wage increases as long as there is increases in productivity.

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Postby paabo » Wed Feb 25, 2009 9:51 pm

Bank of Ghana projects six percent Growth Rate

The Bank of Ghana is projecting a Gross Domestic Growth rate between five and six percent for 2009.

The Ghana Statistical Service has a preliminary estimate of 6.2 percent growth for last year, which is yet to be revised.

“Developments in macroeconomic indicators point to estimates of GDP growth in the region of 6 to 7 percent for 2008,” Dr Paul Acquah, Governor of the Bank of Ghana, told a news conference on Tuesday.

He said the downward trend in oil prices and the current positive terms of trade could help stabilise the economy and engender growth.

He said, while the terms of trade (driven by cocoa and gold prices remain relatively firm) the uncertainty about the impact and the duration of the global recession called for prudence and fiscal discipline.

Touching on the economy performance in 2008, Dr. Acquah said the provisional fiscal data for 2008 indicated that fiscal policy during the year had been expansionary.

He said, although revenue outcome had been robust and mostly above budget targets, expenditures on the other hand, exceeded the budget estimates by wide margins.

Total revenue and grants for 2008 amounted to GH¢5.6 billion as against a total expenditure of over GH¢8 billion (46.5 percent of GDP).

Dr. Acquah said the developments resulted in a budget deficit (excluding divestiture) of GH¢2.5 billion (14.9 percent of GDP) in 2008.

“Including divestiture, the overall deficit amounted to GH¢1.97 billion (11.5 percent of GDP), up from 8.1 percent of GDP for 2007, and 7.7 percent for 2006,” he said.

Wages and salaries took a large chunk amounting to GH¢1.9 billion (11.5 percent of GDP). Excess wages and salaries over the budget estimate amounted to GH¢427.8 million (2.5 percent of GDP), and transfers to purchase crude oil to power the thermal plant amounted to GH¢397.5 million (2.3 percent of GDP).

Other items were sovereign bond financed expenditure of GH¢581.9 million (3.4 percent of GDP) mainly to cover investment in energy. Donor financed capital expenditure amounted to GH¢906.5 million (5.3 percent of GDP). Total capital expenditure for 2008 was 11.7 percent (an annual average of 10.0 percent).

Dr. Acquah said the deficit was financed by a drawdown of sovereign bond deposits with the Bank of Ghana, together with an estimated GH¢1.1 billion of domestic borrowing equivalent to 14.3 percent of money stock.

The stock of domestic debt (gross) stood at GH¢4.7 billion (27.8 percent of GDP) at the end of 2008, up from GH¢3.7 billion (26.5 percent of GDP) in 2007.

The country’s External Debt stood at US$3.98 billion (28.1 percent of GDP) at the end 2008, up from US$3.5 billion (24.9 percent of GDP) in 2007.

“This brings total public debt to the equivalent of US$7.9 billion (55.9 percent of GDP), up from US$7.4 billion (51.4 percent of GDP) in 2007.”

Dr. Acquah said the Bank of Ghana is closely monitoring the shifts in terms of trade and continuous re-alignments of currencies in the international markets and its impact on the Ghanaian economy.

At the moment, Ghana is on the positive side of the terms of trade shift as crude oil prices continue to fall and gold and cocoa prices continue to hold relatively firm, he said.

Dr Acquah said available trade statistics at the end of 2008 reflected the strong pace in economic activity during the year.

Total merchandise export closed the year at US$5.27 billion compare with US$4.17 billion in 2007.

Exports of cocoa beans and products recorded an annual growth of 32.6 percent, and amounted to US$1.50 billion in 2008.

Gold export amounted US$2.24 billion at the end of December 2008 compared with US$1.67 billion at the end of December 2007.

Similarly, non-traditional exports were US$949.2 million at the end of 2008, compared with US$836.8 million for 2007.

The top 5 key non-traditional exports account for about 76.0 percent of total non-traditional exports. The top five in 2008 were Prepared or Preserved Tuna (22.8 percent), Lubricating Oils (21 percent), Cocoa Paste (12.9 percent), Perfumery and Cosmetic Preparations (10.2 percent) and Shea Nuts (9.0 percent).

Total merchandise import increased by 23.6 percent to US$10,260.9 million at the end of December 2008. This compares with corresponding levels US$8,066.1 million respectively for 2007.

Total oil import bill stood at US$2.34 billion due to surge in crude oil prices. This compares with corresponding amounts of US$846.6 million, US$1,523.9 million in the second and third quarters and a full year bill of US$2,095.0 million for 2007.

Non-oil imports also increased to US$7.9 billion at the end of December 2008. The corresponding level was US$5.9 billion in 2007, and represents an annual growth of 32.5 percent.

The above developments translated into a merchandise trade deficit provisionally estimated at US$4.98 billion at the end of December 2008. This compares with a deficit of US$3,893.9 million for 2007. Similarly, the current account deficit was estimated at US$3,473.5 million at the end of December 2008. This compares with US$2,151.5 million for 2007.

Dr Acquah said the overall balance of payments recorded a deficit of US$940.7 million at the end of December 2008, reversing a surplus of US$413.1 million in 2007.

Gross international reserves position at the end of December 2008 stood at US$2.03 billion, representing 1.8 months of imports of goods and services.

Remittances through the banks for the year amounted to US$8.7 billion, which represents 26.8 percent increase over those for 2007.

Of the total transfers for 2008, US$1.67 billion (or 19.2 percent) accrued to individuals, compared with US$1.66 billion (24.1 percent) in 2007.

Source: GNA
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Postby paabo » Wed Feb 25, 2009 9:53 pm

Prime Rate now 18.5%

The Monetary Policy Committee (MPC) of the Bank of Ghana has announced 18.5% as the new prime rate, representing a 1.5% increase.

Some Economists have kicked against the increase, saying it is not the panacea to the dwindling fortunes of the economy.

Joy Business News Correspondent Fred Avornyo, reports the strong demand for goods and services which has impacted negatively on the rate of inflation informed the decision by the MPC to increase the prime rate.

The increase he said would lead to a commensurate increase in interest rates and and expected to reduce the rate of lending to customers.

The overall effect is to mop up excess cash in the system.

The tightening of the monetary policy, the governor pointed out, is in line with government’s policy to reduce expenditure.

On the performance of the country’s economy in 2008, the governor lamented the high food and crude oil prices which he said negatively impacted on the economy.

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