## _cr09238 ## Source details **Canonical URL:** [_cr09238](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2009/_cr09238.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2009/_cr09238.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2009/_cr09238.pdf.json) --- ### Overview - Annual Progress Report (APR) assessing implementation of the Growth and Poverty Reduction Strategy II (GPRS II) for the period 2006-09; covers progress in 2006. - GPRS II goals highlighted: - Doubling the size of the economy within the next decade. - Bringing the average per capita income of Ghanaians to middle-income country level by 2015. - Joint Staff Advisory Note (JSAN) advice: strengthen GPRS II implementation with renewed focus on infrastructure, delivery of basic social services, macroeconomic stability, and debt sustainability. ### Poverty reduction: findings and recommendations Findings - Ghana Living Standards Survey (GLSS-5) results: - National poverty headcount: 28.5 percent by end-2006. - Previously: 39.5 percent in 1998 and 52 percent in 1992. - Slower poverty reduction in rural areas, especially northern areas. Staff recommendations - Future APRs should incorporate GLSS-5 findings and emphasize: - Expand access to infrastructure services, especially safe water supply in poorer regions. - Raise retention rate at primary school level, especially among girls. - Carry out training and skill-building activities, including entrepreneurship and trade, involving private sector providers. ### Macroeconomic policies and framework Findings - Real GDP growth rate in 2006: 6.4 percent, above GPRS II target. - Energy shortages accounted for around 0.5 percent less in real GDP growth in 2006 than otherwise expected. - Despite energy shortages, growth was buoyant in agriculture, mining, construction, and services. - Power supply capacity needs to grow at 8 to 10 percent per year to meet rising demand consistent with current real GDP growth. - APR reports overall fiscal deficit in 2006: 7.5 percent of GDP, compared to the 4.5 percent target in the revised budget. Staff recommendations and priorities - APR should include a comprehensive and updated macroeconomic framework covering fiscal policy, monetary policy, and balance of payments consistent with growth assumptions. - Focus APR macro framework on Debt Sustainability Analysis (DSA), given recourse to non-concessional borrowing and moderate external debt distress risk (per April 2007 joint Bank-Fund DSA). - Design a prudent borrowing policy that includes: - Mechanisms for selection, prioritization, and costing of public investment projects, in line with GPRS II. - Actions to maximize access to concessional aid. - Capacity building in production of debt sustainability analyses. - Future APRs should update the financing gap identified in GPRS II, accounting for debt cancellation, tapping international capital markets, and scaling up concessional assistance where identified. - Reassert greater control over the wage bill and contain energy sector subsidies to preserve macroeconomic stability, especially in the run-up to the 2008 election. - APR should elaborate on reasons behind 2006 expenditure overruns: suspension of pass-through of utility price adjustments after May 2006 and wage increases/hiring outside the regular budget process. ### Strategic pillars - A. Private Sector Competitiveness Findings - Agriculture: performance still weak; constraints to raising productivity persist. - Business environment: Ghana rated among the top ten reformers on the ease of doing business in 2006; indicators exceeded targets for 2006 with improvements over 2005. - Financial sector reforms: progress with legislation including the Foreign Exchange Act (capital account liberalization) and the Credit Reporting Act. - Natural resources: limited progress reversing degradation; fast biomass depletion and weak institutional environmental management. Staff recommendations - Accelerate reform of land administration and collateral use for commercial borrowing. - Future APRs to report on transparency of the trade regime and progress under the 2003 Financial Sector Strategic Plan. - Strengthen banking sector regulation amid rapid credit growth and financial deepening. - Improve environmental and natural resource governance by: - Bridging regulatory gaps related to air pollution and waste management. - Strengthening enforcement capabilities of environmental regulatory agencies. - Ensuring equitable distribution of benefits to communities where resources are located. - Leveraging regional and global arrangements for resource management. - B. Human Resource Development Findings — Education - Gross primary enrollment rate: increased from 87 percent in 2004-05 to 92 percent in 2005-06. - Net enrollment rate: increased to 69 percent in 2005-06 from 59 percent in 2004-05. - Gender parity index: 0.95 in 2005-06, up from 0.93 in 2004-05 (below the 1.0 target in GPRS II). - BECE pass rates vary widely by region and gender. - Per student expenditures rose by just under 12 percent between 2005 and 2006. - Enrollment rose by 6.7 percent between 2005 and 2006. - Per student expenditures rose from US$90 to US$101. - Teacher wages increased by 23 percent. - Teacher recruitment: 500 new national service teachers; 500 professional teachers re-engaged; up to 1,800 youth recruited through the National Youth Employment Program (NYEP). - Increase in untrained teachers contributed to a continued decline in proportion of trained teachers. Staff recommendations — Education - Continue implementing GPRS II and Education Strategic Plan priorities: increase teacher placement and retention in underserved areas, increase access to textbooks, and more frequent BECE monitoring. - Maintain special focus on girls’ education to address regional disparities, low girls’ primary completion rates, and low female post-basic enrollment. Findings and recommendations — Health - Health improvements noted: immunization coverage, supervised maternal deliveries, nutritional indicators, ITN coverage, reduction in U5 malaria case mortality rates, improved doctor-population and nurse-population ratios, and increased NHIS enrollment. - APR should analyze impacts of health policy changes: incorporation of Additional Duty Hours Allowance (ADHA) in the wage bill and shift toward health promotion and disease prevention. Staff recommendations — Health - Scale up safe motherhood and child survival interventions to reach child and maternal health MDGs. - Expand coverage of the National Health Insurance Scheme with better targeting of the poor and the indigent. - Renew commitment to HIV/AIDS treatment and prevention with emphasis on risk groups. - Strengthen Malaria Control Program to sustain ITN use by mothers and infants. Findings and recommendations — Water and Sanitation - National Water Policy approved in June 2007; rural Sector Investment Plans (SIPs) in progress. - 2006 shows decline in rural water investments: fewer new hand-dug wells and fewer new/renovated small community and town pipe systems. - C. Good Governance and Civic Responsibility Findings and staff advice - Decentralization remains a challenge. - Staffs welcome the National Decentralization Plan and recommend a gradual approach to extending administrative and fiscal responsibilities to regional and local governments. - Ensure delegation of adequate revenue base with expenditure obligations and sufficient capacity at lower government levels. - Prudence recommended: do not allow borrowing by local governments. ### Public Financial Management (PFM) progress and gaps Findings - PFM reforms have yielded good results; staff concur with the APR that it is important for the government to persist in efforts to further strengthen PFM. - Public Procurement Board (PPB): - The PPB is now fully operational, with information on upcoming tenders and bidding opportunities. - Contract awards are not yet systematically published. - Information on procurement plans has thus far not been made available. - Application of procurement procedures: - More progress needed in application of procurement procedures in larger public sector units: Ministries of Education, Health, Road Transport, and some larger State Owned Enterprises. - In-depth application of procurement policies and procedures has resource implications and requires the Government’s commitment at the highest level. - Payroll management: - Payroll management and control has been made more operational with the new computerized Integrated Personnel and Payroll Database (IPPD-2) operating online. - Need to strengthen the validation environment for the new payroll system. - Management of the system should be transferred from the installation consultants to the staff responsible in the MDAs. - Additional PFM priorities: - Strengthening of in-year fiscal reporting. - Further improvements to PFM systems needed for effective implementation of a Fiscal Responsibility Law announced in the 2008 budget; the Fund is providing technical assistance. ### Monitoring and Evaluation (M&E) — assessment, challenges, and recommendations Findings - The M&E chapter of the APR provides a comprehensive assessment drawing on the Bank of Ghana, the Ministry of Finance, several sector MDAs, and the Ghana Statistical Service. Challenges - Unavailability of data due to differences in MDA reporting cycles. - Inconsistencies in data collected and differences in annual reporting cycles across MDAs. - Nearly half of governance indicators were unavailable at time of preparation of the 2006 APR. - Reporting system lacks focus on results in some new areas (e.g., Information and Communications Technology) as few indicators or outcomes are stated. Recommendations - Give immediate attention to implementation of the sector and district M&E guidelines completed in 2006. - Strengthen coordination of institutions and capacity development for M&E. - Revise governance indicators and refine M&E framework to align existing frameworks (e.g., the Ghana Partnership and Resources Agreement and the MDBS policy matrix) with the GPRS II. - Make participatory processes more central to APR preparation. - Strengthen the link between indicators collected and expected results in implementing the GPRS II. - Widen the M&E process to include Think Tanks and Civil Society Organizations (CSOs) and engage them in producing regular input (e.g., Citizen’s Report Cards surveys). - Ongoing Public Expenditure Tracking Surveys (PETS) are scheduled to be completed in 2008. ### Conclusions and recommended priorities General assessment - Bank and Fund staffs commend the Ghanaian authorities for their comprehensive and candid 2006 Annual Progress Report on implementation of the GPRS II. - Scope to strengthen macroeconomic sections and elaborate on actions to improve delivery of infrastructure and basic social services, particularly in education and health, while preserving overall quality of the document. - Future APRs should include discussion on a coherent energy sector planning strategy; appropriate energy pricing will be key to fiscal sustainability and moderating domestic demand. Staff priority areas for monitoring GPRS II implementation - (i) maintaining macroeconomic stability, with renewed attention to debt sustainability and the need to resume fiscal consolidation; - (ii) creating conditions for productivity improvements in the private sector; - (iii) diversifying and expanding sources of energy supply; - (iv) improving effective governance, including enhancing accountability and transparency; - (v) increasing the focus on results in the implementation of the GPRS II. ### Key exact figures and statistics - GPRS II period: 2006-09. - GPRS II target: middle-income country level by 2015. - APR coverage year: 2006; 2006 APR was completed on March 31, 2007. - Poverty headcount: 28.5 percent by end-2006; 39.5 percent in 1998; 52 percent in 1992. - Real GDP growth rate in 2006: 6.4 percent. - Estimated impact of energy shortages on growth: around 0.5 percent less in real GDP growth in 2006. - Power supply capacity growth requirement: 8 to 10 percent per year. - Fiscal outcome 2006: overall deficit of 7.5 percent of GDP; revised budget target 4.5 percent. - Per student expenditures: rose by just under 12 percent between 2005 and 2006. - Enrollment increase: 6.7 percent between 2005 and 2006. - Per student expenditures: from US$90 to US$101. - Teacher wage increase: 23 percent. - Teacher recruitment numbers: 500 new national service teachers; 500 professional teachers re-engaged; up to 1,800 youth via NYEP. - Gross primary enrollment: 87 percent in 2004-05 to 92 percent in 2005-06. - Net enrollment rate: 59 percent in 2004-05 to 69 percent in 2005-06. - Gender parity index: 0.93 in 2004-05 to 0.95 in 2005-06. - DSA assessment (April 2007 joint Bank-Fund): Ghana’s risks to external debt distress was moderate. *Joint Staff Advisory Note and Annual Progress Report (2006) assessment of Ghana's GPRS II implementation, as presented in the APR and JSAN text.* ### 1. In June 2006, the Government of Ghana published its second Growth and ### _cr09238 - 1. In June 2006, the Government of Ghana published its second Growth and ### Overview - The document is an Annual Progress Report (APR) assessing implementation of the Growth and Poverty Reduction Strategy II (GPRS II) for the period 2006-09 and covers progress in 2006. - GPRS II goals highlighted: - Doubling the size of the economy within the next decade. - Bringing the average per capita income of Ghanaians to middle-income country level by 2015. - The Joint Staff Advisory Note (JSAN) provides staff advice on priorities to strengthen GPRS II implementation and highlights areas needing renewed focus, notably infrastructure, delivery of basic social services, macroeconomic stability, and debt sustainability. ### Poverty reduction: findings and recommendations Findings - Ghana Living Standards Survey (GLSS-5) results: - National poverty headcount: 28.5 percent by end-2006. - Previously: 39.5 percent in 1998 and 52 percent in 1992. - Slower poverty reduction in rural areas, especially northern areas. Staff recommendations - Future APRs should incorporate GLSS-5 findings and emphasize: - Expand access to infrastructure services, especially safe water supply in poorer regions. - Raise retention rate at primary school level, especially among girls. - Carry out training and skill-building activities, including entrepreneurship and trade, involving private sector providers. ### Macroeconomic policies and framework Findings - Real GDP growth rate in 2006: 6.4 percent, above GPRS II target. - Despite energy shortages, growth was buoyant in agriculture, mining, construction, and services. - APR reports overall fiscal deficit in 2006: 7.5 percent of GDP, compared to the 4.5 percent target in the revised budget. - Energy shortages accounted for around 0.5 percent less in real GDP growth in 2006 than otherwise expected. - Power supply capacity needs to grow at 8 to 10 percent per year to meet rising demand consistent with current real GDP growth. Staff recommendations and priorities - APR should include a comprehensive and updated macroeconomic framework covering fiscal policy, monetary policy, and balance of payments consistent with growth assumptions. - Focus APR macro framework on Debt Sustainability Analysis (DSA), given recourse to non-concessional borrowing and moderate external debt distress risk (per April 2007 joint Bank-Fund DSA). - Design a prudent borrowing policy that includes: - Mechanisms for selection, prioritization, and costing of public investment projects, in line with GPRS II. - Actions to maximize access to concessional aid. - Capacity building in production of debt sustainability analyses. - Future APRs should update the financing gap identified in GPRS II, accounting for debt cancellation, tapping international capital markets, and scaling up concessional assistance where identified. - Reassert greater control over the wage bill and contain energy sector subsidies to preserve macroeconomic stability, especially in the run-up to the 2008 election. - APR should elaborate on reasons behind 2006 expenditure overruns: suspension of pass-through of utility price adjustments after May 2006 and wage increases/hiring outside the regular budget process. ### Strategic pillars #### A. Private Sector Competitiveness Findings - Agriculture: performance still weak; constraints to raising productivity persist. - Business environment: Ghana rated among the top ten reformers on the ease of doing business in 2006; indicators exceeded targets for 2006 with improvements over 2005. - Financial sector reforms: progress with legislation including the Foreign Exchange Act (capital account liberalization) and the Credit Reporting Act. - Natural resources: limited progress reversing degradation; fast biomass depletion and weak institutional environmental management. Staff recommendations - Accelerate reform of land administration and collateral use for commercial borrowing. - Future APRs to report on transparency of the trade regime and progress under the 2003 Financial Sector Strategic Plan. - Strengthen banking sector regulation amid rapid credit growth and financial deepening. - Improve environmental and natural resource governance by: - Bridging regulatory gaps related to air pollution and waste management. - Strengthening enforcement capabilities of environmental regulatory agencies. - Ensuring equitable distribution of benefits to communities where resources are located. - Leveraging regional and global arrangements for resource management. #### B. Human Resource Development Findings - Education access: - Gross primary enrollment rate: increased from 87 percent in 2004-05 to 92 percent in 2005-06. - Net enrollment rate: increased to 69 percent in 2005-06 from 59 percent in 2004-05. - Gender parity index: 0.95 in 2005-06, up from 0.93 in 2004-05 (below the 1.0 target in GPRS II). - Quality concerns: BECE pass rates vary widely by region and gender. - Public expenditure on primary education: - Per student expenditures rose by just under 12 percent between 2005 and 2006. - Enrollment rose by 6.7 percent between 2005 and 2006. - Per student expenditures rose from US$90 to US$101. - Teacher wages increased by 23 percent; additional recruitment included 500 new national service teachers, 500 professional teachers re-engaged, and up to 1,800 youth recruited through the National Youth Employment Program (NYEP). - Increase in untrained teachers contributed to a continued decline in proportion of trained teachers. Staff recommendations - Continue implementing GPRS II and Education Strategic Plan priorities: increase teacher placement and retention in underserved areas, increase access to textbooks, and more frequent BECE monitoring. - Maintain special focus on girls’ education to address regional disparities, low girls’ primary completion rates, and low female post-basic enrollment. Health and water/sanitation findings and recommendations - Health improvements: immunization coverage, supervised maternal deliveries, nutritional indicators, ITN coverage, reduction in U5 malaria case mortality rates, improved doctor-population and nurse-population ratios, and increased NHIS enrollment. - APR should analyze impacts of health policy changes: incorporation of Additional Duty Hours Allowance (ADHA) in the wage bill and shift toward health promotion and disease prevention. - Staff recommendations for health: - Scale up safe motherhood and child survival interventions to reach child and maternal health MDGs. - Expand coverage of the National Health Insurance Scheme with better targeting of the poor and the indigent. - Renew commitment to HIV/AIDS treatment and prevention with emphasis on risk groups. - Strengthen Malaria Control Program to sustain ITN use by mothers and infants. - Water and sanitation: - National Water Policy approved in June 2007; rural Sector Investment Plans (SIPs) in progress. - 2006 shows decline in rural water investments: fewer new hand-dug wells and fewer new/renovated small community and town pipe systems. #### C. Good Governance and Civic Responsibility Findings and staff advice - Decentralization remains a challenge. - Staffs welcome the National Decentralization Plan and recommend a gradual approach to extending administrative and fiscal responsibilities to regional and local governments. - Ensure delegation of adequate revenue base with expenditure obligations and sufficient capacity at lower government levels. - Prudence recommended: do not allow borrowing by local governments. ### Key exact figures and statistics (preserved) - GPRS II period: 2006-09. - GPRS II targets: middle-income country level by 2015. - APR coverage year: 2006; 2006 APR was completed on March 31, 2007. - Poverty headcount: 28.5 percent by end-2006; 39.5 percent in 1998; 52 percent in 1992. - Real GDP growth rate in 2006: 6.4 percent. - Estimated impact of energy shortages on growth: around 0.5 percent less in real GDP growth in 2006. - Power supply capacity growth requirement: 8 to 10 percent per year. - Fiscal outcome 2006: overall deficit of 7.5 percent of GDP; revised budget target 4.5 percent. - Per student expenditures: rose by just under 12 percent between 2005 and 2006. - Enrollment increase: 6.7 percent between 2005 and 2006. - Per student expenditures: from US$90 to US$101. - Teacher wage increase: 23 percent. - Teacher recruitment numbers: 500 new national service teachers; 500 professional teachers re-engaged; up to 1,800 youth via NYEP. - Gross primary enrollment: 87 percent in 2004-05 to 92 percent in 2005-06. - Net enrollment rate: 59 percent in 2004-05 to 69 percent in 2005-06. - Gender parity index: 0.93 in 2004-05 to 0.95 in 2005-06. - DSA assessment (April 2007 joint Bank-Fund): Ghana’s risks to external debt distress was moderate. *Joint Staff Advisory Note and Annual Progress Report (2006) assessment of Ghana's GPRS II implementation, as presented in the APR and JSAN text.* ### 24. Progress in strengthening public financial management (PFM) has yielded good ### Progress in strengthening public financial management (PFM) has yielded good ### Public financial management (PFM) progress and gaps - PFM reforms have yielded good results and staff concur with the APR that it is important for the government to persist in its efforts to further strengthen PFM. - Public Procurement Board (PPB): - The PPB is now fully operational, with information on upcoming tenders and bidding opportunities. - Contract awards are not yet systematically published. - Information on procurement plans has thus far not been made available. - Application of procurement procedures: - More progress is needed in focusing on the application of procurement procedures and policies in some of the larger public sector units: Ministries of Education, Health, Road Transport, as well as in some of the larger State Owned Enterprises. - An in-depth application of procurement policies and procedures has resource implications and requires the Government’s commitment at the highest level. - Future APR reporting (recommended foci): - (i) strengthening internal and external scrutiny of the use of public funds, including of procurement decisions, and - (ii) strengthening the implementation of internal audit and controls, and following up on the findings of the external audit reports. - Payroll management: - Payroll management and control has been made more operational with the new computerized Integrated Personnel and Payroll Database (IPPD-2) operating online. - There is still the need to strengthen the validation environment for the new payroll system. - Management of the system should be transferred from the installation consultants to the staff responsible in the MDAs. - Additional PFM priorities: - (i) the strengthening of in-year fiscal reporting; and - (ii) further improvements to PFM systems needed specifically for the effective implementation of a Fiscal Responsibility Law, which has been announced in the 2008 budget and for which the Fund is providing technical assistance. ### Monitoring and Evaluation (M&E) — assessment, challenges, and recommendations - Scope and sources: - The M&E chapter of the APR provides a comprehensive assessment of the implementation of the GPRS II at the macroeconomic and sectoral level, drawing on information available from the Bank of Ghana, the Ministry of Finance, as well as several sector Ministries, Departments and Agencies (MDAs) and the Ghana Statistical Service. - Data collection and coordination challenges: - Unavailability of data due to differences in the MDA reporting cycles. - Inconsistencies in data collected. - Differences in the annual reporting cycles adopted by the different ministries, departments and agencies. - These factors strengthen the case for giving immediate attention to the implementation of the sector and district M&E guidelines completed in 2006. - The challenges relate primarily to coordination of institutions and capacity development, rather than the design of the M&E plan. - Coverage and indicator quality: - M&E reporting has been broadened to include new areas, such as Information and Communications Technology. - The reporting system still lacks focus on results in some of these new areas, as few indicators or outcomes are stated. - Governance indicators would benefit from being revised: nearly half of them were unavailable at the time of the preparation of the 2006 APR. - A more refined M&E framework could help align existing frameworks (e.g., the Ghana Partnership and Resources Agreement and the MDBS policy matrix) with the GPRS II and strengthen evidence-based policy making. - Procedural and participatory recommendations: - Make participatory processes more central to the preparation of the APRs. - Strengthen the link between the information on the indicators collected and the results expected in the implementation of the GPRS II. - Ongoing Public Expenditure Tracking Surveys (PETS) are currently scheduled to be completed in 2008 and are cited as a case in point. - Widen the M&E process to include Think Tanks and Civil Society Organizations (CSOs) to anchor them more firmly in the M&E system and engage them in producing regular input, such as the already launched Citizen’s Report Cards surveys. ### Conclusions and recommended priorities - General assessment: - Bank and Fund staffs commend the Ghanaian authorities for their comprehensive and candid 2006 Annual Progress Report on the implementation of the GPRS II. - There is scope to strengthen further the macroeconomic sections of the document and elaborate on actions to improve the delivery of infrastructure and basic social services, particularly in education and health, but this should not detract from the overall quality of the document. - Future APRs should include discussion on a coherent energy sector planning strategy which, if not properly addressed, could choke off accelerated growth needed to attain the MDGs. - Appropriate energy pricing will be key to fiscal sustainability while helping moderate domestic demand. - Priorities in monitoring implementation of the GPRS II (staffs’ view): - (i) maintaining macroeconomic stability, with renewed attention to debt sustainability and the need to resume fiscal consolidation; - (ii) creating conditions for productivity improvements in the private sector; - (iii) diversifying and expanding sources of energy supply; - (iv) improving effective governance, including enhancing accountability and transparency; and - (v) increasing the focus on results in the implementation of the GPRS II. *Source: _cr09238 - 24. Progress in strengthening public financial management (PFM) has yielded good* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2009/_cr09238.pdf_