Country Report Ghana September 2009

Outlook for 2009-10

• The president, John Atta Mills, and his ruling National Democratic Congress (NDC) will have to balance honouring their electoral promises with stabilising the economy in a very challenging global and local environment.
• The global recession and heightened risk aversion represent a stern test for Ghana's new policymakers, as the economy slows amid much weaker commodity prices and tighter global financing conditions.
• Real GDP growth is forecast to ease to 4.7% 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.
• The stronger US dollar, a large current-account deficit and low foreign-exchange reserves will cause the cedi to continue to depreciate in 2009-10.
• The effects of expansionary government spending and a weak currency are expected to cause inflation to increase to 20% in 2009, before tighter fiscal and monetary policies help to lower it to an average of 13.7% in 2010.
• Falling demand for capital imports and healthy export growth are expected to narrow the current-account deficit to 17.2% of GDP in 2009 and 14.4% of GDP in 2010.

Monthly review

• The opposition New Patriotic Party (NPP), has won the Akwatia constituency, bringing to an end months of legal wrangling that had steadily worked its way up the judicial system, culminating in a Supreme Court ruling.
• The NPP held a conference in August with the aim of amending the party constitution. Top among the changes implemented was placing a limit on the number of members seeking the party's nomination for presidential elections.
• A mid-year budget review undertaken by the government has shown a worsening fiscal picture. Growth in debt arrears by the previous NPP government was higher than originally anticipated in the 2009 budget.
• The government has appointed Kwesi Bekoe Amissah-Arthur as the new central bank governor. Although primarily a political appointment, Mr? Amissah-Arthur has a number of years' relevant experience.
• There has been mixed economic performance in the first half of 2009. Economic growth has remained robust, but inflation has remained stubbornly high.
• As a result of high inflation??