Front Matter Page

©1996 International Monetary Fund

August 1996

IMF Staff Country Report No. 96/69

Ghana—Selected Issues and Statistical Annex

This report on selected issues and statistical annex on Ghana was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with this member country. As such, the views expressed in this document are those of the staff team and do not necessarily reflect the views of the Government of Ghana or the Executive Board of the IMF.

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International Monetary Fund

Washington, D.C.

Front Matter Page

INTERNATIONAL MONETARY FUND

GHANA

Selected Issues and Statistical Annex

Prepared by a staff team consisting of Mr. M. Nowak (Head-AFR),

Mr. R. Basanti (AFR), Mr. A. Bulíř (AFR), Mr. J. Harnack (AFR),

Mr. S. Rizavi (PDR), and Mr. L. Leigh (EP-AFR)

Approved by the African Department

June 6, 1996

Contents

• Basic Data

• Selected Social and Demographic Indicators

• Selected Issues

  • I. Impact of Cocoa Taxation on Cocoa Supply in Ghana

    • A. Introduction

    • B. Cocoa Production in Ghana: A Review of Recent History

    • C. Taxation of Cocoa in Ghana

      • 1. Political economy of commodity taxation

      • 2. Four potential benefits of commodity taxation

      • 3. Taxation of cocoa in Ghana in the 1990s

    • D. Empirical Analysis of the Cocoa Supply in Ghana

      • 1. Research to date

      • 2. Determinants of cocoa supply in Ghana

      • 3. Empirical results

      • 4. Simulated medium-term effects of producer price changes

    • E. Conclusions

• Text Tables

  • 1.1 Producer Income, Marketing Cost, and Government Revenue, 1951-96

  • 1.2 Projected and Actual Macroeconomic Developments, 1992/93-1994/95

  • 1.3 Cocoa Supply Regression Results, 1951-95

  • 1.4 Unit Roots Tests

  • 1.5 Cointegrated Vectors (0) in Johansen Estimation, 1951-95

• Charts

  • 1.1 Cocoa Output Development

  • 1.2 Cocoa Price Developments

Ghana - Basic Data

^1/Figures for 1990 and 1993 include takeover of the accumulated revaluation losses of the Bank of Ghana by the Government.

^2/Percentage change in relation to beginning money stock (M2).

^3/Includes cocoa financing; figures for 1990 include nonperforming loans.

Area, population, and GDP per capita
	Area				238, 540 square kilometers
	Population: Total (mid-1994 estimate)				16.2 million
			Growth rate		3.1 percent
	GDP per capita (1994 estimate)				SDR 304
				1988	1989	1990	1991	1992	1993	1994	1995
Gross domestic product
	Total (in billions of cedis)			1,051	1,417	2,032	2,575	3,009	3,949	4,950.4	7,577.2
		At current prices
				(In percent of real GDP)
		Agriculture		47.4	47.1	44.6	44.4	42.5	41.6	41.1	40.9
		Industry		14.4	14.0	14.5	14.3	14.6	14.5	14.5	14.4
		Services		41.0	41.6	43.5	43.9	45.5	46.4	46.7	47.0
				(Annual percentage changes)
	Nominal GDP			40.9	34.8	43.4	26.7	16.9	31.2	25.4	53.1
	Real GDP			5.6	5.1	3.3	5.3	3.9	5.0	3.8	4.5
	Exports (volume)			12.1	10.0	7.4	13.8	4.5	21.8	1.1	0.3
	Imports (volume)			0.3	0.8	7.3	11.9	5.7	17.6	-12.4	-0.5
Prices
	GDP deflator			33.4	28.3	38.8	20.4	12.5	25.0	20.8	46.5
	National consumer price index			31.4	25.2	37.2	18.0	10.1	25.0	24.9	59.5
	Export prices			-4.7	-16.6	3.3	-2.2	-5.5	-11.4	14.1	16.3
	Import prices			5.8	0.8	11.6	-2.2	2.6	-0.6	10.7	8.4
	Terms of trade			-9.9	-17.2	-7.5	-0.1	-7.9	-10.9	3.1	7.3
Central government finance				(In billions of cedis)
	Revenue and grants			153.8	214.5	267.3	390.6	366.3	724.2	1,280.6	1,784.6
	Expenditure and net lending			149.9	204.2	264.0	351.6	510.7	821.6	1,156.8	1,713.7
		Of which: current
			expenditure	(111.0)	(148.6)	(198.2)	(263.7)	(373.3)	(643.5)	(896.9)	(1,270.0)
	Surplus or deficit (-)			3.9	10.4	3.4	39.0	-144.4	-97.3	123.8	70.9
		As percent of GDP		0.4	0.7	0.2	1.5	-4.8	-2.5	2.5	0.9
	Foreign financing (net)			2.3	5.0	24.6	12.7	0.3	52.0	-85.0	-42.6
	Domestic financing (net)			-6.2	-15.3	-28.0	-51.7	144.2	45.4	-38.8	-28.3
		Of which: banking system		(-11.2)	(-21.4)	(-20.8)	(-50.7)	(102.5)	(-22.1)	(-44.3)	(-66.5)
Money and credit (end-of-period)				(Annual percentage change)
	Net domestic assets 1/ 2/			8.5	-10.7	110.3	0.2	64.7	2.6	2.4	16.0
	Net claims on the
		Government 1/ 2/		-7.4	-7.7	121.1	-12.3	30.2	-4.3	-5.2	-6.9
	Credit to rest of the
		economy 2/ 3/		16.5	6.0	12.6	6.8	18.7	11.2	26.5	14.3
	Broad money			43.0	26.9	18.0	19.9	52.9	27.4	46.2	37.4
	Velocity (ratio GDP/M2)			5.6	5.9	7.2	7.6	5.8	6.0	5.1	5.7

^1/Figures for 1990 and 1993 include takeover of the accumulated revaluation losses of the Bank of Ghana by the Government.

^2/Percentage change in relation to beginning money stock (M2).

^3/Includes cocoa financing; figures for 1990 include nonperforming loans.

View Table

Area, population, and GDP per capita
	Area				238, 540 square kilometers
	Population: Total (mid-1994 estimate)				16.2 million
			Growth rate		3.1 percent
	GDP per capita (1994 estimate)				SDR 304
				1988	1989	1990	1991	1992	1993	1994	1995
Gross domestic product
	Total (in billions of cedis)			1,051	1,417	2,032	2,575	3,009	3,949	4,950.4	7,577.2
		At current prices
				(In percent of real GDP)
		Agriculture		47.4	47.1	44.6	44.4	42.5	41.6	41.1	40.9
		Industry		14.4	14.0	14.5	14.3	14.6	14.5	14.5	14.4
		Services		41.0	41.6	43.5	43.9	45.5	46.4	46.7	47.0
				(Annual percentage changes)
	Nominal GDP			40.9	34.8	43.4	26.7	16.9	31.2	25.4	53.1
	Real GDP			5.6	5.1	3.3	5.3	3.9	5.0	3.8	4.5
	Exports (volume)			12.1	10.0	7.4	13.8	4.5	21.8	1.1	0.3
	Imports (volume)			0.3	0.8	7.3	11.9	5.7	17.6	-12.4	-0.5
Prices
	GDP deflator			33.4	28.3	38.8	20.4	12.5	25.0	20.8	46.5
	National consumer price index			31.4	25.2	37.2	18.0	10.1	25.0	24.9	59.5
	Export prices			-4.7	-16.6	3.3	-2.2	-5.5	-11.4	14.1	16.3
	Import prices			5.8	0.8	11.6	-2.2	2.6	-0.6	10.7	8.4
	Terms of trade			-9.9	-17.2	-7.5	-0.1	-7.9	-10.9	3.1	7.3
Central government finance				(In billions of cedis)
	Revenue and grants			153.8	214.5	267.3	390.6	366.3	724.2	1,280.6	1,784.6
	Expenditure and net lending			149.9	204.2	264.0	351.6	510.7	821.6	1,156.8	1,713.7
		Of which: current
			expenditure	(111.0)	(148.6)	(198.2)	(263.7)	(373.3)	(643.5)	(896.9)	(1,270.0)
	Surplus or deficit (-)			3.9	10.4	3.4	39.0	-144.4	-97.3	123.8	70.9
		As percent of GDP		0.4	0.7	0.2	1.5	-4.8	-2.5	2.5	0.9
	Foreign financing (net)			2.3	5.0	24.6	12.7	0.3	52.0	-85.0	-42.6
	Domestic financing (net)			-6.2	-15.3	-28.0	-51.7	144.2	45.4	-38.8	-28.3
		Of which: banking system		(-11.2)	(-21.4)	(-20.8)	(-50.7)	(102.5)	(-22.1)	(-44.3)	(-66.5)
Money and credit (end-of-period)				(Annual percentage change)
	Net domestic assets 1/ 2/			8.5	-10.7	110.3	0.2	64.7	2.6	2.4	16.0
	Net claims on the
		Government 1/ 2/		-7.4	-7.7	121.1	-12.3	30.2	-4.3	-5.2	-6.9
	Credit to rest of the
		economy 2/ 3/		16.5	6.0	12.6	6.8	18.7	11.2	26.5	14.3
	Broad money			43.0	26.9	18.0	19.9	52.9	27.4	46.2	37.4
	Velocity (ratio GDP/M2)			5.6	5.9	7.2	7.6	5.8	6.0	5.1	5.7

^1/Figures for 1990 and 1993 include takeover of the accumulated revaluation losses of the Bank of Ghana by the Government.

^2/Percentage change in relation to beginning money stock (M2).

^3/Includes cocoa financing; figures for 1990 include nonperforming loans.

^1/Public and publically guaranteed medium- and long-term debt.

						1988	1989	1990	1991	1992	1993	1994	1995
Balance of payments						(In millions of U.S. dollars)
	Exports, f.o.b.					881.0	808.3	896.8	997.6	986.3	1,063.6	1,226.7	1,431.2
		Of which: cocoa beans and
					products	(462.0)	(407.8)	(360.6)	(346.5)	(302.5)	(285.9)	(320.2)	(389.5)
				noncocoa products		(418.9)	(400.5)	(536.2)	(651.1)	(683.8)	(771.4)	(906.5)	(1,041.7)
	Imports, f.o.b.					-990.9	-1,006.1	-1,205.0	-1,318.7	-1,456.6	-1,728.0	-1,579.9	-1,687.2
		Of which: oil				(-142.9)	(-155.8)	(-198.5)	(-165.1)	(-157.6)	(-153.6)	(-171.1)	(-191.0)
	Trade balance					-110.0	-197.8	-308.2	-321.1	-470.3	-664.3	-353.2	-256.0
	Services and transfers (net)					20.5	102.8	90.2	69.4	94.2	105.3	88.2	114.3
	Current account balance					-89.5	-94.9	-218.0	-251.7	-376.1	-559.0	-265.0	-141.8
	Capital account net					217.8	222.4	284.0	391.5	274.0	630.1	478.8	492.1
		Of which: official capital
					(net)	(187.2)	(192.0)	(290.4)	(356.6)	(386.5)	(370.2)	(295.3)	(170.5)
	Errors and ommissions					-3.8	--	52.0	31.0	-22.2	-30.0	-50.2	-66.3
		Overall balance				124.6	127.5	118.0	170.8	-124.3	41.2	163.7	284.0
	Current account balance
		as a percent of GDP				-1.7	-1.8	-3.5	-3.6	-5.5	-9.2	-5.1	-2.2
Gross official international reserves
	End-of-period					200.8	249.0	269.3	489.2	388.2	420.4	592.9	779.7
	In months of imports, c.i.f.					2.2	2.7	2.5	4.1	2.9	2.7	4.1	5.1
External public debt
	Disbursed and outstanding
		(end-of-period; including the Fund) 1/				3,011.4	2,908.6	3,295.2	3,778.9	4,104.0	4,476.1	4,720.2	4,865.9
	Debt service as a percent of
		exports of goods and services
			Including the Fund			68.3	58.1	37.0	28.9	25.1	35.7	27.4	35.8
			Excluding the Fund			34.0	32.5	21.6	18.8	17.4	29.1	20.5	28.3
Exchange rates						(Cedis per U.S. dollar)
	End-of-period					229.9	303.0	344.8	390.6	520.8	822.2	1,050.9	1,255.0
	Period average					202.3	270.0	326.3	367.8	437.1	648.9	956.6	1,146.6

^1/Public and publically guaranteed medium- and long-term debt.

View Table

						1988	1989	1990	1991	1992	1993	1994	1995
Balance of payments						(In millions of U.S. dollars)
	Exports, f.o.b.					881.0	808.3	896.8	997.6	986.3	1,063.6	1,226.7	1,431.2
		Of which: cocoa beans and
					products	(462.0)	(407.8)	(360.6)	(346.5)	(302.5)	(285.9)	(320.2)	(389.5)
				noncocoa products		(418.9)	(400.5)	(536.2)	(651.1)	(683.8)	(771.4)	(906.5)	(1,041.7)
	Imports, f.o.b.					-990.9	-1,006.1	-1,205.0	-1,318.7	-1,456.6	-1,728.0	-1,579.9	-1,687.2
		Of which: oil				(-142.9)	(-155.8)	(-198.5)	(-165.1)	(-157.6)	(-153.6)	(-171.1)	(-191.0)
	Trade balance					-110.0	-197.8	-308.2	-321.1	-470.3	-664.3	-353.2	-256.0
	Services and transfers (net)					20.5	102.8	90.2	69.4	94.2	105.3	88.2	114.3
	Current account balance					-89.5	-94.9	-218.0	-251.7	-376.1	-559.0	-265.0	-141.8
	Capital account net					217.8	222.4	284.0	391.5	274.0	630.1	478.8	492.1
		Of which: official capital
					(net)	(187.2)	(192.0)	(290.4)	(356.6)	(386.5)	(370.2)	(295.3)	(170.5)
	Errors and ommissions					-3.8	--	52.0	31.0	-22.2	-30.0	-50.2	-66.3
		Overall balance				124.6	127.5	118.0	170.8	-124.3	41.2	163.7	284.0
	Current account balance
		as a percent of GDP				-1.7	-1.8	-3.5	-3.6	-5.5	-9.2	-5.1	-2.2
Gross official international reserves
	End-of-period					200.8	249.0	269.3	489.2	388.2	420.4	592.9	779.7
	In months of imports, c.i.f.					2.2	2.7	2.5	4.1	2.9	2.7	4.1	5.1
External public debt
	Disbursed and outstanding
		(end-of-period; including the Fund) 1/				3,011.4	2,908.6	3,295.2	3,778.9	4,104.0	4,476.1	4,720.2	4,865.9
	Debt service as a percent of
		exports of goods and services
			Including the Fund			68.3	58.1	37.0	28.9	25.1	35.7	27.4	35.8
			Excluding the Fund			34.0	32.5	21.6	18.8	17.4	29.1	20.5	28.3
Exchange rates						(Cedis per U.S. dollar)
	End-of-period					229.9	303.0	344.8	390.6	520.8	822.2	1,050.9	1,255.0
	Period average					202.3	270.0	326.3	367.8	437.1	648.9	956.6	1,146.6

^1/Public and publically guaranteed medium- and long-term debt.

Ghana - Selected Social and Demographic Indicators ^1/

Sources: Statistical Service, Quarterly Digest of Statistics; IMF, International Financial Statistics; and data provided by the World Bank.

^1/Unless otherwise mentioned, data refer to the latest available estimates.

^2/Poverty 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, 1988/89, and 1991/92.

Ghana - Selected Social and Demographic Indicators ^1/

Area
	Total land area (square kilometers)				238,540
	Agricultural land (in percent of total)				41.0
Population and vital statistics
	Total population (mid-1993, in millions)				16.6
	Population growth rate				2.7
	Urban population (percent of total)				35.8
	Population density (per sq. km. of agricultural land)				67.9
	Population age structure (in percent)
		0-14 years			48
		15-64 years			48
		65 and above			4
	Crude birth rate (per thousand)				41
	Crude death rate (per thousand)				11
	Infant mortality rate (per thousand)				66
	Life expectancy at birth (years)				58
Health and nutrition
	Access to safe water (in percent of population)
		Total			56
		Urban			93
		Rural			39
	Per capita supply of
		Calories (per day)			2,141
		Proteins (grams per day)			34
Labor force
	Total labor force (in millions)				7.9
	Participation rate (in percent)
		Total			47
		Male			44
		Female			24
Education
	Enrollment rates (in percent of age group)
		Primary enrollment			76
			Female		70
		Secondary enrollment			36
			Female		28
	Pupil-teacher ratio
		Primary			29
		Secondary			19
	Literacy (in percent of population 15 years and over)				60
Poverty incidence (percent of population below
	the poverty line) 2/			1987-88	1991-92
		Urban		25.7	26.5
		Rural		41.9	33.9
		National		36.4	31.5

Sources: Statistical Service, Quarterly Digest of Statistics; IMF, International Financial Statistics; and data provided by the World Bank.

^1/Unless otherwise mentioned, data refer to the latest available estimates.

^2/Poverty 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, 1988/89, and 1991/92.

View Table

Ghana - Selected Social and Demographic Indicators ^1/

Area
	Total land area (square kilometers)				238,540
	Agricultural land (in percent of total)				41.0
Population and vital statistics
	Total population (mid-1993, in millions)				16.6
	Population growth rate				2.7
	Urban population (percent of total)				35.8
	Population density (per sq. km. of agricultural land)				67.9
	Population age structure (in percent)
		0-14 years			48
		15-64 years			48
		65 and above			4
	Crude birth rate (per thousand)				41
	Crude death rate (per thousand)				11
	Infant mortality rate (per thousand)				66
	Life expectancy at birth (years)				58
Health and nutrition
	Access to safe water (in percent of population)
		Total			56
		Urban			93
		Rural			39
	Per capita supply of
		Calories (per day)			2,141
		Proteins (grams per day)			34
Labor force
	Total labor force (in millions)				7.9
	Participation rate (in percent)
		Total			47
		Male			44
		Female			24
Education
	Enrollment rates (in percent of age group)
		Primary enrollment			76
			Female		70
		Secondary enrollment			36
			Female		28
	Pupil-teacher ratio
		Primary			29
		Secondary			19
	Literacy (in percent of population 15 years and over)				60
Poverty incidence (percent of population below
	the poverty line) 2/			1987-88	1991-92
		Urban		25.7	26.5
		Rural		41.9	33.9
		National		36.4	31.5

Sources: Statistical Service, Quarterly Digest of Statistics; IMF, International Financial Statistics; and data provided by the World Bank.

^1/Unless otherwise mentioned, data refer to the latest available estimates.

^2/Poverty 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, 1988/89, and 1991/92.

Contents

• II. Divestiture of State-Owned Enterprises in Ghana

  • A. Introduction

  • B. Background

  • C. The Divestiture Process

    • 1. Activities of the DIC

    • 2. Activities of FINSAP

    • 3. Divestiture of AGC shares

    • 4. Involvement of the World Bank

  • D. The Impact of Divestiture

    • 1. The nonfinancial sector

    • 2. The financial sector

  • E. The Outlook for Future Action

• Text Tables

  • II.1 State-Owned Enterprises Covered by the PSAC

  • II.2 Number of State-Owned Enterprises Divested

  • II.3 Sectoral Classification of Divested Enterprises

  • II.4 Ownership of Financial Institutions

  • II.5 Status of PSAC Implementation

• III. The Transmission Mechanism Between Money and Inflation in Ghana

• A. Introduction

  • 1. Inflation and monetary growth - recent developments

  • 2. Review of empirical models of inflation in Ghana

• B. The General Inflation Model and Data Description

• C. A Dynamic Econometric Model of Inflation in Ghana

  • 1. Stationarity status of data variables and test for cointegration

  • 2. An error-correction model of inflation

  • 3. Economic interpretation of the error-correction model of inflation

• D. Incorporating Expectations in the Inflation Model

  • 1. Modeling expectations

  • 2. Interpretation of the estimated expectations models of inflation

  • 3. Forecast analysis of inflation

  • E. Conclusions

• Text Tables

  • III.1 Actual and Programmed Inflation and Money Growth Over the Period 1990-95

  • III.2 The Estimated Nonexpectations Inflation Model in Ghana

  • III.3 The Estimated Adaptive Expectations Inflation Model in Ghana

  • III.4 The Estimated Rational Expectations Inflation Model in Ghana

  • III.5 Summary Statistics of the Ex ante Inflation Forecast for 1996 Based on Estimated Inflation Equations

  • III.6 Unit Roots Tests Results of the Individual Variables

  • III.7 Seasonal Unit Roots Tests Results of the Individual Variables

  • III.8 The Johansen-Juselius VAR Cointegration Results

  • III.9 Competing Inflation Model Performance

  • III.10 Nonnested Encompassing Tests for Inflation Model 2 Versus 3

• Charts

  • III.1 Inflation and Broad Money Growth, 1985-95

  • III.2 Inflation: Actual and Forecast for 1995 from the Estimated Error-Correction Model

• Statistical Annex

• Tables

  • National Accounts

  • 1. Gross Domestic Product by Sector, 1990-95

  • 2. Gross Product by Expenditure Category, 1990-95

  • 3. Composition and Growth of Gross Domestic Product by Sector, 1990-95

  • 4. Composition and Growth of Gross Domestic Product by Expenditure Category, 1990-95

  • Production

  • 5. Cocoa Bean Production, Consumption, Prices, Payments to Farmers, and Export Receipts, 1984/85-1995/96

  • 6. Operations of the Cocoa Board (Cocoa Division), 1988/89-1995/96

  • 7. Production, Acreage, and Yield of Principal Food Crops, 1989-94

  • 8. Production and Exports of Logs, Sawn Timber, Veneer, and Plywood, 1988-94

  • 9. Domestic Fish Catch and Imports, 1989-94

  • 10. Mineral Production, 1987-94

  • 11. Index of Manufacturing Production, 1988-94

  • 12. Generation and Consumption of Electricity, 1987-94

  • 13. Savings and Investment, 1990-95

  • Prices and Wages

  • 14. Average Monthly Earnings per Employee, 1976-96

  • 15. National Consumer Price Index (monthly averages), 1985-95

  • 16. National Consumer Price Index (percentage changes), 1985-95

  • 17. National Consumer Price Index (year-on-year percentage changes), 1987-95

  • 18. Index of Wholesale Prices, 1985-90

  • 19. Average Wholesale Prices of Selected Agricultural Commodities, 1987-95

  • 20. Retail Prices of Major Petroleum Products, December 1979-February 1996

  • 21. Central Government Operations and Financing, 1989-95

  • 22. Central Government Revenue and Grants, 1989-95

  • 23. Economic Classification of Central Government Expenditure and Net Lending, 1989-95

  • 24. Functional Classification of Central Government Expenditure, 1989-94

  • 25. Distribution of Outstanding Central Government Domestic Debt, 1989-94

  • 26. Operations of the Social Security and National Investment Trust, 1989-94

  • 27. Summary of Financial Operations of Select Major State-Owned Enterprises, 1989-94

  • 28. Public Investment Program, 1993-95

  • Money and Banking

  • 29. Summary of the Monetary Survey, 1989-95

  • 30. Summary Accounts of the Bank of Ghana, 1989-95

  • 31. Summary Accounts of Deposit Money Banks, 1989-95

  • 32. Distribution of Bank Loans and Advances to Public Institutions and the Private Sector, 1989-95

  • 33. Reserve Ratios of Commercial Banks, 1989-95

  • 34. Interest Rate Structure of Banks, March 1993-December 1995

  • External Accounts

  • 35. Balance of Payments, 1988-95

  • 36. External Trade Indices, 1988-95

  • 37. Value, Volume, and Unit Price of Exports, 1988-95

  • 38. Direction of Trade, 1987-94

  • 39. Services and Transfers Account, 1990-95

  • 40. Clearing Accounts Under Bilateral Payments Agreements, June 1990-December 1995

  • 41. External Public Debt and Debt Service, 1989-95

  • Summary of Tax System. May 1996