カントリーリスク評価
Ghana

Ghana

Population 30.2 million
GDP 2,221 US$
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Country risk assessment
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Synthesis

major macro economic indicators

  2018 2019 2020 (e) 2021 (f)
GDP growth (%) 6.3 6.5 1.0 3.0
Inflation (yearly average, %) 9.8 7.2 10.0 9.0
Budget balance (% GDP)* -7.0 -7.3 -15.0 -9.0
Current account balance (% GDP) -3.1 -2.7 -3.5 -3.0
Public debt (% GDP) 59.1 62.8 76.0 75.0

(e): Estimate (f): Forecast *Financial sector bailout cost included in 2018 and 2019

STRENGTHS

  • Health system highly ranked in Africa
  • Significant mining (gold), agricultural (cocoa), oil and gas resources
  • Huge rise in mobile telephony
  • Stable democracy
  • Attractive business environment, favourable to FDI
  • International financial support

WEAKNESSES

  • High level of debt (60% commercial) and risk of fiscal slippage
  • Private sector crowded out of the local credit market by public financing needs
  • Low public revenue: 13% of GDP
  • Infrastructure gaps (energy, transport)
  • Dependent on commodity prices: gold and oil (70% of exports), cocoa (16%, 30% with other agricultural products)
  • Weak banking sector: 14% doubtful loans in 2019, high credit costs
  • Separatist tendencies on the eastern border with Togo

Risk assessment

Recovery expected in 2021

Even if the measures to combat the COVID-19 pandemic were not particularly harsh, they still contributed to a fall in growth in 2020. However, the main reason for the growth decrease was the collapse in export revenues from oil, as well as cocoa to a much lesser extent. Despite the support plan (Coronavirus Alleviation Programme, worth 3% of GDP), domestic demand declined, especially investment.

In 2021, barring a resurgence of the pandemic, activity should accelerate. The lifting of the last travel restrictions will revitalise consumption, benefiting services, which have been hard hit in all areas besides telecommunications. Better prospects for the energy market should be accompanied by a rebound in oil exports. Gold production and sales should continue to benefit from high prices, but also from normalisation of logistics and intensified efforts to fight illegal mining and smuggling. Agriculture will continue to be supported by the government plan to develop and modernise the cocoa industry, which provides a livelihood for 800,000 people. Despite the persistence of the cocoa swollen-shoot virus, production is set to increase modestly, and prices should stabilise after slipping in 2020, partly thanks to the adoption of a price support mechanism agreed with major buyers. Infrastructure and industrial site projects aimed at diversifying the economy, which were put on hold in 2020, are expected to be launched under the One District One Factory initiative. The agri-food industry is concerned, but also fertilisers and automobile assembly, with the arrival of large global players. The COVID-19 Alleviation and Revitalisation of Enterprises Support (CARES) initiative is expected to be part of this push. A GHS 100 billion programme (25% of GDP) over 2020-2023, the CARES initiative, which is 30% financed by the government, is intended to revive the economy and attract investment through exemptions from charges and public-private partnerships.

 

Public accounts made worse by the crisis

Ghana’s public accounts, which were already in bad shape, were made worse by the crisis. In 2020, debt exceeded 70% of GDP (not counting the 10% relating to arrears and debts of state-owned companies). To compensate, very partially, for the support plan, the government cut some expenditure items by 0.3% of GDP and imposed a deferral for interest payments on non-negotiable domestic bonds held by public institutions. The financing requirement, including the deficit and debt service, amounted to 16% of GDP. It was covered by issuances on international markets, exceptional multilateral financing (from the IMF and others), investments on the domestic market, and the central bank. Interest absorbed half of the revenues, which were admittedly low, and represented 7% of GDP. The deficit cap provided for in the Fiscal Responsibility Act has been suspended. Once the crisis is over, the deficit will be reduced, although it will remain high, and the debt burden should stabilise in 2021. Moreover, the costly recapitalisation of the banking system ended in 2020, when it represented 5.5% of GDP. Meanwhile, the IPO for Agyapa Royalties, the country’s gold royalty company, is expected to go ahead, enabling future revenues to be monetised. However, reforms to struggling public sectors, such as the energy sector, through the Energy Sector Recovery Programme (2019-2023), remain a necessity, despite being put on hold by the crisis. Government arrears to the energy sector represent 1% of GDP each year. Furthermore, the financial sector could be weakened and become a burden again. After the elections, Ghana may commit to a new programme with the IMF, the last Credit Facility having expired in March 2019.

 

The crisis only slightly widened the current account deficit, which remained modest. Despite the decrease in oil and cocoa exports, gold revenues and declining imports fuelled a substantial trade surplus. As in the past, the surplus largely compensated for the income deficit, which reflected the impact of increased debt servicing, lower expatriate remittances (5% of GDP in 2019) and profit repatriation by foreign investors. It also made up for the services deficit, which is dominated by purchases of services linked to oil development and transport, and which is increasing due to growing use of telecommunications. The slowdown in FDI in oil, with the delayed development of the Pecan field, weakens the financing of the current account deficit, which will no longer be able to count on the exceptional multilateral aid of 2020. The cedi could therefore continue to come under downward pressure, particularly with the partial monetisation of the deficit, which is stoking inflation. Foreign exchange reserves represented 2.7 months of imports at the end of 2020.

 

The two major parties on an equal footing

At the end of a tense campaign, incumbent President Nana Akufo-Addo and his New Patriotic Party barely retained power following the presidential and legislative elections of December 2020. Their opponent was John Mahama, the president’s predecessor, who was defeated in the 2016 elections and was running as a candidate for the National Democratic Congress. In parliament, both parties hold the same number of seats, which will complicate political life. Respect for constitutional norms, entrenched for nearly three decades, should ensure the country's political stability. That being said, the lack of progress in reducing poverty (25%) and fighting corruption is a source of popular frustration.

 

Last updated: March 2021

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