Country Report Ghana

Outlook for 2008-09

• Ghana's political scene will be dominated by the forthcoming presidential and legislative elections in December 2008.
• The main opposition party, the National Democratic Congress (NDC), appears unified and focused on regaining the presidency at the 2008 election.
• Real GDP growth is forecast to remain robust, at 6.3% in 2008 and 6.5% in 2009, as the mining sector continues to grow strongly.
• Election-related spending and continuing high oil prices are expected to push average inflation to 14% in 2008, before lower domestic food prices and government spending help it to fall to 11.7% in 2009.
• Assuming that normal weather patterns return and international prices for gold and cocoa remain strong, the current-account deficit is forecast to narrow from 11.5% of GDP in 2007 to 10.6% of GDP in 2008 and 9.7% of GDP in 2009.

Monthly review

• The primaries for parliamentary candidates for the ruling New Patriotic Party (NPP) have seen a number of incumbents ousted by local NPP members.
• Some of the MPs who have lost their seats have complained of bribery and intimidation of their supporters during the primary process and have threatened to run as independents.
• Violence between the Kusasis and Mamprusis flared again in early May, resulting in a 22-hour curfew during most of May in the Bawku municipality.
• In May the Bank of Ghana (BoG, the central bank) raised its prime rate from 14.25% to 16% in an effort to combat rising inflation.
• The BoG has also increased the minimum capital requirement for bank's operating in the country in an attempt to improve bank quality.
• A new generalised electronic payments and settlements system is to be introduced in Ghana to improve efficiency in the banking and retail sectors.
• The fiscal deficit for the first quarter of 2008 was 2.9% of GDP compared with just 0.9% of GDP in 2007, owing to the poorer performance of revenue and the rise in expenditure compared to 2007.
• Year-on-year inflation hit a new high of 15.3% in April, reflecting high international oil prices, increases in domestic food prices and robust government spending.
• The overall current-account deficit increased to US$726m in the first quarter of 2008, compared with a deficit of US$423m for the same period in 2007, owing to rising imports of capital equipment for oil exploration and mining.

SOURCE: Country Report