For more information, see Ghana and the IMF

Ghana—Enhanced Structural Adjustment Facility
Economic and Financial Policy Framework Paper, 1998–2000

Tables

Table 1. Ghana: Summary and Time Frame for Macroeconomic and
Structural Adjustment Policies, 1998–2000

Policy AreaObjectives and Targets Strategies and Measures Timing of Measures Technical Assistance Requirements
I. Fiscal Policies
A. Overall objective Promote macroeconomic stability. Achieve an increase in the domestic primary budget surplus from 0.3 percent of GDP in 1996 to 3.2 percent of GDP in 1997 and 4.3 percent of GDP in 1998, and about 5 percent in 1999-2000. 1998-2000
B. Revenue Improve domestic revenue mobilization. Strengthen tax administration. Table in Parliament legislation to create a central revenue authority. March 1998  
  Establish a central revenue authority June 1998  
    Ensure that no discretionary tax and customs exemptions can be granted without parliamentary approval. Implement an exemptions monitoring and reporting system, to ensure transparency and control. 1998  
  Restructure tax system in favor of expenditure-based taxation. Promote incentives for private investment. Introduce a VAT replacing the sales tax and extending coverage to services and retail sectors. 1998 IMF, 1998 DFID, 1998 WB, 1998-9
  Complete the assignment of taxpayer identification numbers to the targeted group of taxpayers. June 1998  
    Simplify the tax system and convert specific excises to ad valorem rates. Budget 1998  
    Harmonize the withholding tax on dividends and on interest. Budget 1998  
    Gradually reduce cocoa taxation (see Agriculture) 1998-2000  
    Announce application of import withholding tax to importers not registered for the VAT, in accordance with the tax law 1999-2000  
    Adjust income tax brackets for inflation. 1999-2000  
C. Expenditure Improve efficiency and effectiveness of public expenditure through improved allocation and management of public resources. Reduce total spending relative to GDP, as per program. 1998-2000  
  Begin monthly projection of cash flow for the budget and monitor outturns as the basis for managing the public sector borrowing requirement. March 1998  
    Complete medium-term expenditure framework (MTEF) for priority sectors of education, health, and roads. Prioritize investment projects consistent with macroeconomic objectives and budget constraints. June 1998 DFID, WB, 1998-99
    Cabinet approval of budget ceilings for priority sectors and of the guidelines for the 1999 budget. September 1998  
    Manual testing and phased implementation of BPEMS system to all ministries and spending units. 1998-2000 WB, 1998-2000  
D. Local government Develop capacity at the local government level to assist the government in its decentralization initiative. Develop action plan for decentralization, including the design of financial and administrative arrangements. 1998 CIDA, 1998
 
II. Public Sector Reform Achieve a smaller and more effective public service. Remedy operational deficiencies of the Integrated Personnel and Payroll Database (IPPD) System. June 1998 WB, 1998 DFID, 1998
    Launch rationalization of the regulatory regime for subvented agencies. Budget 1998 WB, 1998
    Launch rationalization of the size and pay structure of civil service and subvented agencies. Budget 1998 WB, 1998
    Identify subvented agencies to be reincorporated into the budget, privatized or closed. September 1998
  Accelerate and expand divestiture program. From the divestiture list of state-owned enterprises (SOE) offer for sale an additional 20 SOEs and at least two of the following: the State Housing Corporation, State Insurance Corporation, and Mim Timber processing plant. 1998 WB,
1998-2000
 
III. Monetary Policy and Financial Sector Reform Reduce inflation through monetary restraint. Control monetary growth through targeting of reserve money, as per program. 1998-2000  
Encourage the mobilization of financial savings and encourage net inflows of capital. Maintain positive real interest rates on bank deposits through appropriately tight liquidity management. 1998-2000  
  Enhance the effectiveness of the system of indirect monetary control and develop the secondary market in domestic debt instruments. Strengthen open market operations through the use of wholesale auction of treasury bills and refrain from signaling indicative cutoff prices. 1998-2000 IMF, 1998  
  Introduce a centralized book-entry system at the Bank of Ghana. June 1998  
  Expand instruments of liquidity management to include repurchase agreements initiated by the Bank of Ghana. June 1998  
  License appropriate number of primary dealers. 1998-2000 IMF, 1998
  Review liquidity ratios with a view to reducing them to levels needed for prudential purposes. 1998-2000  
Improve efficiency of financial sector by accelerating financial sector reforms and promoting greater competition through divestiture. Divest 60 percent of the shares of the National Investment Bank. 1998 WB, 1998
Offer for sale the Reinsurance Corporation after commercial restructuring. December 1998 WB, 1998
    Strengthen banking supervision. 1998-2000 IMF, 1998 WB, 1998
 
IV. External Sector Policy        
A. Exchange System Broaden and deepen the foreign exchange market. Encourage transactions among market participants by facilitating flow of information regarding market conditions. 1998  
B. External Debt Management Reduce external debt service burden. Strictly limit new short-term borrowing and adhere to ceilings envisaged in the program regarding new nonconcessional public and publicly guaranteed borrowing. Publish list of guaranteed loans in the budget documents. 1998-2000  
  Regularize relations with external creditors. Intensify efforts to conclude bilateral agreements with Paris Club creditors regarding the deferred arrears. 1998  
C. Trade Policy Ensure that trade system enhances external competitiveness. Reduce distortions through reduction of zero-rating and exemptions, and other measures. 1998  
 
V. Sectoral Policies        
A. Petroleum Sector Reforms   Offer for sale GNPC's non-oil-related assets. March 1998  
    Replace uniform national pump prices with uniform ex-regional depot wholesale prices. March 1998  
    Reduce GNPC's debt to the Bank of Ghana to
   —   18 billion
   — zero
 
 
March 1998
June 1998
    Offer for sale Tema Oil Refinery Ltd. and the Ghana Oil Company Ltd. June 1998 WB, 1998
    Restructure GNPC and relieve it of all functions unrelated to hydrocarbon and energy-related activities. 1998  
    Decontrol retail petroleum prices (ex-depot) subject to safety and competition standards, followed by the fully competitive operation of TOR. 1998-2000 WB, 1998
    Rationalize institutional responsibilities for hydrocarbon exploration to increase transparency. 1998  
B. Agriculture Environment Liberalize the cocoa sector. Increase farmers' share in f.o.b. price of cocoa to:   WB,
1998-2000
     56 percent June 1998  
       58 percent June 1999  
       60 percent June 2000  
    Identify two-year program of cost-cutting measures for the Cocoa Board to support at least one half of the intended increase in the share of the producers. March 1998  
    Offer for sale the Produce Buying Company (PBC). June 1998  
    Unify extension services of the Cocoa Board and Ministry of Agriculture. June 1998 WB, 1998-99
  Ensure conservation of natural resources and protection of the environment. Strengthen extension services to implement soil fertility program. 1998-2000  
  Increase stumpage fees to reduce subsidies for wood processing and preserve forest resources. 1998-2000 WB,
1998-2000
    Establish a national integrated water management program with further strengthening and development of the institutional and regulatory framework. 1998-2000 WB,
1998-2000
C. Infrastructure        
   a. Urban
   Infrastructure
Increase coverage, quality, and efficiency of water supply, sanitation, waste management, and drainage. Increase coverage, quality, and efficiency of water supply, sanitation, waste management, and drainage. 1998-2000 WB,
1998-2000
  Increase private sector participation and cost recovery in water supply, sanitation, waste management, and drainage. 1998-2000 WB,
1998-2000
   b. Rural
   Infrastructure
Expansion in coverage of feeder roads and market infrastructure. Expand and improve feeder road network and village market infrastructure. 1998-2000 WB,
1998-2000
   c. Power Ensure the financial viability of the power sector. Increase electricity tariffs to restore and maintain the financial viability of power utilities. 1998-2000 WB,
1998-2000
   d. Roads Improve the road network. Implement road improvement program as agreed under the donor-supported Highway Sector Investment Program. 1998-2000 WB,
1998-2000
   e. Rail Improve operational efficiency and financial viability. 1998-2000 WB,
1998-2000
   f. Ports Improve operational efficiency and capacity. Increase participation of the private sector in port management and operations. 1998-2000  
D. Human Resource Development        
   a. Education Improve the quality of schooling, equity of access, and management efficiency and increase the literacy rate. Implement the donor-supported Basic Education Sector Improvement Program. 1998-2000 WB, DFID, USAID, and others, 1998-2000
   b. Health Improve health outcomes. Implement the donor-supported Health Sector Investment Program. 1998-2000 WB,
1998-2000
 
VI. Statistical issues Improve quality and timeliness of statistics. Begin publishing new national consumer price index. March 1998  
    Publish revised and updated national accounts (sources and uses) for 1995 and 1996. March 1998  
    Allocate resources and improve quality and timeliness of national accounts and price, balance of payments, public finance (including debt), and monetary statistics. 1998-2000 IMF, WB, DFID, and others, 1998-2000
 
 
Table 2. Ghana: Selected Economic and Financial Indicators 1994-2000
  1994 1995 1996
Act.
1997
Prel.
1998
Proj.
1999
Proj.
2000
Proj.
  (Annual percentage change, unless otherwise specified)
 
National income and prices
   Real GDP 3.8 4.5 5.2 3.0 5.6 5.8 5.8
   Real GDP per capita 0.7 1.4 2.1 -0.1 2.5 2.7 2.7
   Nominal GDP (in billions of cedis)    4,950    7,418 10,385 13,863 17,655 20,378 22,873
   Nominal GDP 34.7 49.9 40.0 33.5 27.3 15.4 12.2
   GDP deflator 29.8 43.4 33.1 29.6 20.6 9.1 6.1
   Consumer price index (annual average) 24.9 59.5 45.6 27.9 15.5 8.0 5.3
   Consumer price index (end of period) 34.2 70.8 32.7 20.8 11.0 5.5 5.0
 
External sector              
   Exports, f.o.b. 15.3 16.7 9.8 -3.8 9.7 14.3 10.1
   Imports, f.o.b. -8.6 6.8 14.5 -6.5 9.8 9.3 6.4
   Export volume 2.6 0.3 12.5 -2.7 7.5 11.2 6.7
   Import volume -12.4 -0.5 13.8 -3.3 10.3 7.4 4.9
   Terms of trade 3.1 7.3 -3.0 2.2 2.6 1.1 1.7
   Nominal effective exchange rate1 -17.7 -23.5 -26.8 . . . . . . . . . . . .
   Real effective exchange rate1 -17.6 14.9 12.2 . . . . . . . . . . . .
   Cedis per US dollars1 957 1,200 1,637 2,050 . . . . . . . . .
 
Government budget              
   Domestic revenue 68.8 62.4 26.1 22.5 29.2 18.0 12.9
   Total expenditure 44.2 45.5 43.5 11.2 24.2 2.4 9.7
      Current expenditure 33.9 36.7 46.5 23.1 17.1 0.1 10.2
      Capital expenditure and net lending 2 60.9 57.3 40.1 -3.4 35.3 5.5 9.0
 
Money and credit 3              
   Net domestic assets4 20.5 15.8 30.3 33.4 9.5 -1.1 -0.2
      Credit to government 4 -5.9 6.6 12.8 22.4 9.2 0.0 -4.4
      Credit to the rest of the economy 4 23.1 15.0 15.7 18.2 7.2 4.0 3.9
   Broad money (including foreign
      currency deposits)5
53.0 40.8 39.7 40.8 18.0 12.0 11.0
   Reserve money 78.9 35.1 44.3 33.8 11.4 12.0 11.0
   Velocity (GDP/average broad money) 5.2 5.4 5.1 4.9 5.1 5.1 5.1
   Treasury bill rate in percent;
      (end of period)
29.5 40.5 42.8 40.0 . . . . . . . . .
 
  (In percent of GDP, unless otherwise specified)
 
Investment and saving              
   Gross investment 16.9 18.6 18.6 16.0 17.9 18.1 19.5
      of which: private 3.1 4.1 5.0 5.4 5.5 7.5 8.0
   Gross national saving 11.8 16.3 13.6 12.7 13.7 14.3 15.8
      of which: private 7.1 9.4 9.3 10.7 8.3 7.6 8.1
 
Government budget              
   Domestic revenue 19.7 21.4 19.2 17.6 18.3 18.7 18.8
   Total grants 3.7 3.8 3.0 0.9 2.9 1.7 1.6
   Total expenditure2 32.8 31.8 32.6 27.2 27.5 24.4 23.8
   Overall balance (commitment basis) -9.3 -6.7 -10.4 -8.6 -6.3 -4.0 -3.4
   Domestic primary balance 0.8 1.6 0.3 3.3 3.8 3.8 3.9
   Divestiture receipts 5.2 1.4 1.4 0.8 0.8 0.1 0.1
 
External sector              
   Current account balance6 -5.1 -2.3 -5.0 -3.3 -4.2 -3.9 -3.7
   Current account balance7 -9.0 -6.5 -8.3 -6.4 -7.3 -6.6 -5.4
   External debt outstanding 94.5 95.0 97.3 93.6 95.2 92.0 87.7
   External debt service, including to the Fund 7.3 9.2 7.5 8.2 8.7 8.1 6.7
    (in percent of exports of goods and
       nonfactor services)
27.4 35.8 27.4 32.9 33.2 28.9 23.4
    (in percent of government revenue) 36.9 42.0 38.7 46.2 47.7 43.3 34.4
 
  (In millions of U.S. dollars, unless otherwise specified)
 
   Current account balance6 -265 -142 -320 -220 -290 -287 -295
   Overall balance of payments 164 284 -13 -25 -40 -133 -119
   External payments arrears (end of year) 135 100 0 0 0 0 0
   Gross international reserves (end of period) 593 710 606 466 478 573 653
      (in months of imports, c.i.f.) 4.1 4.6 3.4 2.8 2.7 2.9 3.1
 
   Sources: Ghanaian authorities; and Fund staff estimates and projections.
   1Annual average data.
   2Including capital outlays financed through external project aid and transfers to the local authorities.
   3From December 1996, the coverage was increased from 11 to 17 banks.
   4In percent of broad money at the beginning of the period.
   5The program for 1996 was based on broad money excluding foreign currency deposits. The programmed growth was 5 percent, and the outturn was 34.2 percent.
   6Including official grants.
   7Excluding official grants.
 

 
Table 3. Ghana: Selected Social and Demographic Indicators
   
Latest single year
Same region/
income group
  1970–75 1980–85 1990–95 Sub-Saharan
Africa
Low
income
Area          
   Total land area (square kilometers)     328,540    
   Agricultural land (in percent of total)     41.0    
           
Population          
   Total population, midyear (millions) 9.8 12.6 17.1 583.4           3,179.9
   Growth rate (annual average in percent) 2.2 3.7 2.6 2.8           1.6
   Urban population (population in percent) 30.1 32.3 36.3 31.1           28.6
   Total fertility rate (births per woman) 6.6 6.5 5.1 5.7           3.2
   Population age structure (percent)          
      0-14 years     43.0    
      15-64 years     53.0    
      65 and above     4.0    
           
Life expectancy at birth (years)          
   Total 50.0 53.0 59.0 52.0           63.0
      Male 48.0 52.0 57.0 51.0           62.0
      Female 52.0 55.0 61.0 54.0           64.0
           
Mortality          
   Infant (per thousand live births) 107.0 98.0 73.0 92.0           69.0
   Under age 5 (per thousand live births) . . . . . . 116.0 157.0           104.0
   Adult (aged 15-59)        
      Male (per 1,000 population) . . . . . . 320.0 433.0           244.0
      Female (per 1,000 population)   . . . 253.0 359.0           211.0
   Maternal (per 100,000 live births) . . . 1,000.0 742.0 . . .          . . .
           
Income          
   GNP per capita (US$) 300.0 360.0 350.0 490.0           430.0
   Consumer price index (1990=100) . . . 31.0 323.0 . . .          . . .
   Food price index (1990=100) . . . 26.0 307.0 . . .          . . .
           
Income/consumption distribution          
      (percent of income or consumption)          
   Lowest quintile . . . . . . 7.9 . . .          . . .
   Highest quintile . . . . . . 42.2 . . .          . . .
           
Social indicators          
   Public expenditure (percent of GDP)          
      Health . . . . . . 1.6 . . .          . . .
      Education 3.6 1.9 3.4 . . .          . . .
      Social security and welfare . . . . . . . . . . . .          . . .
           
Health and nutrition          
   Access to safe water
         (percent of population)
         
      Total 35.0 . . . 56.0 47.0           53.0
         Urban 86.0 57.0 76.0 . . .          . . .
         Rural 14.0 40.3 46.0 . . .          . . .
      Per capita supply (1993)          
         Calories (per day)     2,141 . . .          . . .
         Protein (grams per day)     34 . . .          . . .
 
Immunization rate (percent under 12 months)          
   Measles . . . . . . 68 60           77
   DPT . . . 22 71 58           80
Child malnutrition (percent under 5 years) . . . . . . 27 . . .          42
 
Labor force          
   Total labor force (in millions)     8    
   Participation rate (in percent)          
      Total     47    
      Male     44    
      Female     51    
 
Education (1993)          
   Enrollment rates (in percent of age group)          
      Primary enrollment     76    
         Female     70    
      Secondary enrollment     36    
         Female     28    
Literacy (in percent of population
   15 years and older)
    60    
 
Poverty incidence (percent of population
      below the poverty line)1
  1987–88 1992    
   National head count index   36.9 31.4    
      Urban head count index   41.9 26.7    
      Rural head count index   36.4 34.3    
   Sources: Ghana Statistical Service, Quarterly Digest of Statistics; IMF, International Financial Statistics; and the World Bank.
   1Poverty line estimated at Cedi 132,230 per year as at mid-1992. Based on the living standards surveys conducted by the Ghana Statistical Service in collaboration with the World Bank during 1987/88,1988/98, and 1991/92.
 

 

Table 4. Ghana: External Financing Requirements and Sources, 1995–99
(In millions of U.S. dollars)
  1995 1996 1997   
Estimate
1998 1999

Projections
Current account (excluding official transfers) -402 -525 -435 -505 -484
   Exports, f.o.b. 1,431 1,571 1,511 1,658 1,895
   Imports, f.o.b.  -1,687  -1,932  -1,805 -1,982 -2,165
   Services (net) -409 -441 -437 -492 -529
   Private transfers 263 276 296 311 314
 
Capital account -79 -204 -288 -302 -179
   Scheduled amortization -330 -203 -258 -328 -374
   IMF repayments -108 -125 -166 -138 -75
   Other capital (net) 359 124 136 164 271
           
Change in official reserves (increase –) -187 99 140 -12 -95
           
Change in arrears (decrease –) -35 -100 0 0 0
           
External financing requirements -703 -731 -583 -819 -758
           
Expected disbursements 703 631 583 819 650
   Grants 263 206 216 215 198
      Project 179 153 184 188 185
      Program 84 52 31 27 13
   Concessional loans 397 386 367 493 415
      Project 322 314 326 388 357
      Program 75 72 41 105 59
   IMF 43 40 0 111 37
           
Debt deferral/rescheduling 0 100 0 0 0
           
Residual financing gap 0 0 0 0 108
             
   Sources: Ghanaian authorities; and Fund staff estimates and projections.
 

 

Table 5. Ghana: External Public Debt and Debt Service Payments, 1994–2002
(In millions of U.S. dollars, unless otherwise specified)
 
1994 1995 1996 1997
Est.
1998 1999 2000 2001 2002

Projections
Total public and publicly
      guranteed debt
5,703 5,875 6,174 6,324 6,605 6,796 6,908 6,967 6,925
   Of which                  
      Multilateral (including IMF) 4,226 4,298 4,662 4,752 4,971 5,083 5,134 5,126 5,014
      Bilateral 1,302 1,400 1,484 1,532 1,633 1,713 1,773 1,842 1,910
      Other1 175 178 28 40 0 0 0 0 0
                   
External public debt service                  
   Principal 270 438 328 424 466 450 406 389 358
      Medium term 130 256 127 172 198 252 240 230 210
      Long term 57 75 77 86 130 122 128 125 133
      IMF repurchases 83 108 125 166 138 75 38 34 15
   Interest 106 128 144 127 141 150 125 126 134
      Medium term 36 45 61 65 66 73 55 57 60
      Long term 59 72 73 54 70 72 66 65 70
      IMF charges 11 11 11 8 6 5 4 4 4
   Total                  
      Including IMF 376 566 473 551 607 600 532 515 492
      Excluding IMF 282 447 337 377 463 520 489 477 473
 
Memorandum items:  
   External public debt-service ratio2  
      Including IMF 27.4 35.8 27.4 32.9 33.2 28.9 23.4 20.8 18.6
      Excluding IMF 20.5 28.3 19.5 22.5 25.3 25.0 21.5 19.3 17.8
   Ratio of external public debt
         service to GDP3
 
      Including IMF 7.3 9.2 7.5 8.2 8.7 8.1 6.7 6.1 5.4
      Excluding IMF 5.4 7.2 5.3 5.6 6.7 7.0 6.2 5.6 5.2
   Ratio of external public debt
         service to GDP3
110.2 95.0 97.3 93.6 95.2 92.0 87.7 82.2 75.8
   Sources: Ghanaian authorities; and Fund staff estimates and projections.
   1Consists of short-term oil credits, Cocoa Board debt, and Bank of Ghana debt.
   2In percent of exports of goods and nonfactor services.
   3In percent.
 
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