Country Report Ghana April 2009

Outlook for 2009-10

• The new president, John Atta Mills, and his ruling National Democratic Congress (NDC) will spend the next few months consolidating power and re-establishing themselves after being out of power since 2001.
• The global recession and heightened risk aversion will compound the challenges facing Ghana's new policymakers as the economy slows, amid much weaker commodity prices and tighter financing conditions.
• Real GDP growth is forecast to ease to 5.2% in 2009 on the back of weaker credit growth and reduced government spending, before recovering modestly to 5.4% in 2010, supported by investments in the oil sector.
• After a steep fall in 2008, the cedi looks to be closer to its appropriate level against the US dollar. The stronger dollar and low foreign-exchange reserves will cause the cedi to continue to slide against the US currency in 2009-10.
• The effects of expansionary government spending in 2008 are expected to cause inflation to remain high at an average of 14% in 2009 before tighter fiscal and monetary policy help to lower it to an average of 10.8% in 2010.
• Falling imports and healthy export growth are expected to narrow the current-account deficit to 15.5% of GDP in 2009 and to 12.2% of GDP in 2010.

Monthly review

• A recent report from the auditor-general has uncovered signs of extensive corruption in several ministries and government agencies.
• There appears to be a growing disaffection for the presidency of Mr Atta Mills among notable NDC members and sympathisers.
• Ethnic tensions have been increasing in parts of the country, underpinned by the power struggles between the ruling party and the main opposition.
• On March 5ththe new minister of finance, Kwabena Duffuor, presented the 2009 budget to parliament, targeting a modest narrowing of the deficit.
• In March president Mr Atta Mills announced a full public disclosure of all present and future oil contracts in order to increase transparency in the sector.
• Ghana Statistical Service (GSS) data show that for 2008, real GDP grew by 6.2%, led by growth in industry and services.
• The UK's Tullow Oil has secured US$2bn in funding to develop its offshore assets in Ghana, including the large Jubilee Field.
• Export earnings for 2008 are estimated to have increased by 26.4% to US$5.27bn, mainly owing to higher prices and volumes for exports of gold and cocoa.

Source: Country Report