Abstract
All quantitative and structural performance criteria for end-June 2003 were observed. These positive results reflect several factors, including improved public expenditure management and strengthened revenue administration (offsetting delays in some of this year's new revenue measures), supported by a bumper cocoa harvest, higher world prices for cocoa and gold, and increased donor inflows. These plans should include civil service reform, energy sector restructuring, reform of land registration, and measures to strengthen governance. The goal of single-digit inflation remains achievable.
1. This statement reports on (i) implementation of the prior actions for completion of the first review under the Poverty Reduction and Growth Facility, as specified in the staff report, Appendix I, Attachment I, Table I.2, and (ii) some economic data that have become available since the issuance of the staff report. This information does not alter the thrust of the staff appraisal.
2. The Ghanaian authorities informed the staff on December 10, 2003, that all of the prior actions had been implemented:
On November 5, 2003, parliament passed a supplementary budget consistent with aggregate expenditures for 2003 of less than ¢19,233 billion.
Electricity tariffs were increased by 6 percent, effective October 1, 2003, and water tariffs by 10 percent, effective November 1, 2003. Tariff levels were in line with the automatic adjustment formulas (as specified in the staff report, Appendix I, Attachment II, Tables I.5 and I.6) as of these dates.
On November 20, cabinet approved a strategy for Ghana Commercial Bank that would “use the Ghana Stock Exchange to seek additional resources through a flotation of new shares in the bank and, through competitive tender, procure a management contract for the bank to ensure improvements in its financial performance and service delivery.” This decision is consistent with paragraph 21 of the authorities’ memorandum of economic and financial policies (staff report, Appendix I, Attachment I).
3. The following information has become available since issuance of the staff report:
The consumer price index declined in October 2003 by 0.4 percent over the preceding month, bringing the 12-month inflation rate down from 26.8 percent in September to 24.6 percent in October. (The program target for December 2003 is 22 percent.)
The Bank of Ghana has reported (provisionally) that its net international reserves reached US$668 million at end-November 2003. This implies an accumulation since end-2002 of US$545 million, which exceeds the program target for 2003 as a whole (US$378 million).
Reserve money data for November 2003 show an expansion of 6 percent since the beginning of the year, comfortably below the path envisaged under the program. Broad money (M2) grew by 36.6 percent in the 12 months through September 2003, compared to a programmed 38.5 percent for the same period.
Interest rates in the treasury bill market have continued to fall. At the latest auction, the yield on three-month treasury bills dropped to 18½ percent, the lowest rate since 1986.
Fitch Ratings have published a B sovereign rating for Ghana, with a “positive” outlook. Other countries with this rating include Cameroon, Mozambique, and Turkey.