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Democracy and Governance in Ghana
Ghana is making significant progress on the economic front. The nation
is controlling expenditures and monetary growth, maintaining a stable exchange rate, lowering inflation
and interest rates, developing a trade policy framework, actively promoting investment, addressing
structural deficiencies in the energy and infrastructure sectors, and strengthening good governance and
transparency. However, cumbersome government requirements are serious obstacles to business
development. In early 2003 the high inflation rate of 30% was due to the Government of Ghana's (GOG's)
lifting subsidies and increasing fuel and utility prices, but if the GOG maintains current fiscal policies,
inflation should drop to the annual target of 22%. By controlling expenditures and exceeding revenue
targets, the GOG expected to balance the budget in 2003. The GOG has also maintained a zero net
domestic financing requirement and the IMF positively assessed Ghana's economic performance during a
review of the Poverty Reduction Growth Facility. Real GDP growth is projected at 4.7% for 2003, up from
4.5% in 2002. Ghana's currency, the Cedi, is stable; foreign reserves surpass $1 billion. Ghana reached
its Heavily Indebted Poor Country (HIPC) decision point in February 2002, realizing significant budgetary
savings.
From 2000 to 2003 the GOG increased nominal expenditures for health by more than 300% and almost
as much for education. Under-five mortality, as measured by the 1993 and 1998 Demographic and
Health Surveys (DHS), has declined from 119 deaths to 108 deaths per 1,000 live births. The population
growth rate of 2.4% per annum is still a serious problem. HIV/AIDS prevalence appears to have
stabilized at around 4%, but risks for explosive growth remain.
Ghana also receives assistance directly from USAID/Washington: the
Democracy and Human Rights Fund finances activities in support of human rights and democratic
institutions and the Self-Help program supports local non-government organization activities. These
efforts are administered by the U.S. Embassy. P.L. 480 resources are channeled through U.S. Private
Voluntary Organizations for activities such as agroforestry, on-farm production and storage,
small/microenterprise and microcredit programs, school feeding, community health programs, potable
water supply, and sanitation. P.L. 480 resources are expected to increase by 50%, with expanded food
distribution for primary school children in the north, the severely disabled, and people living with
HIV/AIDS. The U.S. Department of the Treasury provides support to the Ministry of Finance and
Economic Planning through a technical advisor in debt management and periodic training in tax
administration.
(Excerpted from the 2005 Congressional Budget Justification for Ghana)
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