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1997 Country Reports
On Economic Policy and Trade Practices

Department of State report submitted to the Senate Committees on Foreign Relations and on Finance and to the House Committees on Foreign Affairs and on Ways and Means, January 1998.

	1995	1996	1997 1/
Income, Production and Employment
Nominal GDP 2/	6,179	6,342	6,012
Real GDP Growth (pct.) 3/	4.5	5.2	5.5
GDP by Sector:
Agriculture	2,533	2,574	2,465
Manufacturing	525	539	511
Services	2,898	3,070	2,808
Government	809	882	788
Per Capita GDP	370	375	340
Labor Force (000)	6,000	6,150	6,250
Unemployment Rate (pct.)	N/A	N/A	N/A
Money and Prices (annual percentage growth)
Money Supply Growth (M2)	37.5	34.2	40.0
Consumer Price Inflation	70.8	32.7	27.5
Exchange Rate (Cedis/USD - Annual Average)
Official	1,200	1,637	2,205
Balance of Payments and Trade
Total Exports FOB 4/	1,431	1,571	1,600
Exports to U.S. 4/	196	171	166
Total Imports CIF 4/	1,687	1,937	1,903
Imports from U.S. 4/	167	294	325
Trade Balance 4/	(256)	(366)	(303)
Balance with U.S.	29	(123)	(159)
External Public Debt	5,074	5,347	5,400
Fiscal Deficit/GDP (pct.)	0.9	-1.5	1.4
Current Account
Deficit/GDP (pct.)	2.0	5.0	5.0
Debt Service
Payments/GDP (pct.)	10.6	8.0	N/A
Gold and Foreign Exchange Reserves	592.9	709.9	700.0
Aid from U.S.	45	44	52
Aid from All Other Sources	715	696	N/A

1/ 1997 figures are all estimates based on available monthly data in October 1997
2/ GDP at factor cost
3/ Percentage changes calculated in local currency
4/ Merchandise trade

1. General Policy Framework

Ghana operates in a free market environment under a popularly-elected civilian government. In December, 1996, Ghana had its second experience in multiparty elections, since the inauguration of the 4th Republic in January, 1993, with the reelection of President Jerry John Rawlings for a second four-year term.

Rawlings headed a "provisional" regime from the end of 1981 until January, 1993, when democratic government under a written constitution was restored. Unlike the previous parliament, the present has an opposition presence with 67 seats out of 200. An independent judiciary acts as the final arbiter of Ghanaian laws. The next presidential and parliamentary elections are scheduled for the year 2000.

Since 1983 Ghana has pursued an economic reform agenda aimed generally at reducing government involvement in the economy and encouraging private sector development. Inflationary pressures due to government expenditure overruns prior to 1992 and 1996 presidential and parliamentary elections and other factors continue to be felt. Government has introduced measures to control and monitor its spending. Despite measures being implemented to avoid fiscal deficit, first quarter data of 1997 still show another sizable fiscal deficit requiring continued high levels of domestic borrowing from the banking system and the public. WhileGhanahas benefitted from IMP programs in recent years the current ESAF is off track due to fiscal and inflation problems.

The Bank of Ghana is currently pursuing a high interest rate policy in an attempt to absorb excess liquidity and contain inflationary pressures. Short-term interest rates are now in the 40-50 percent range. Inflation measured about 70 percent at year-end 1995 and has consistently declined to about 28 percent at the end of September, 1997. Adequate rains and good harvests this year have moderated upward pressure on food prices. However, growth in the money supply was 5 percent in the first quarter of 1997 which follows trends of the past years. This could have serious consequences for inflation and inflationary expectations in 1997.

The government's economic program has focused on the development of Ghana's private sector, which historically has been weak. Privatization of state-owned enterprises continues, with about two-thirds of 300 enterprises sold to private owners. Ghana achieved real economic growth of 5.2 percent in 1996, up from the 4.5 percent recorded in 1995. Growth in the mining sector has been particularly brisk in recent years while agriculture (which still accounts for about 40 percent of GDP) and manufacturing have recorded much slower growth. Other reforms adopted under the government's structural adjustment program include the elimination of exchange rate controls and the lifting of virtually all restrictions on imports. The establishment of an Interbank Foreign Exchange Market has greatly expanded access to foreign exchange. The elimination of virtually all local production subsidies is further indication of the government's intention to move toward a market orientation for the economy.

2. Exchange Rate Policy

The foreign exchange value of the Ghanaian cedi is established through the mechanism of an Interbank Market and Foreign Exchange Bureaus, and currency conversion is easily obtained. As the demand for imports has risen steadily, the government has allowed the cedi to depreciate. During the past 12 months the value of the cedi relative to the dollar has fallen by 28 percent and stood at 2260 cedi to the dolar in November 1997. Nevertheless, Ghana's high rate of inflation has resulted in an appreciation of the cedi's real exchange rate. In general, the exchange rate regime in Ghana does not have any particular impact on the competitiveness of U.S. exports.

3. Structural Policies

Ghana progressively wound down import quotas and surcharges as part of its structural adjustment program. Tariff structures are being adjusted in harmony with the ECOWAS Trade Liberalization Program. Importers now are required to sign a declaration that they will comply with Ghanaian tax and other laws. Imported goods currently enjoy generally unfettered access to the Ghanaian market.

The government professes strong support for the principle of free trade. However, it is also committed to the development of competitive domestic industries with exporting capabilities. The government is expected to continue to support domestic private enterprise with various financial incentives. Ghanaian manufacturers seek stronger protective measures and complain that Ghana's tariff structure places local producers at a competitive disadvantage relative to imports from countries enjoying greater production and marketing economies of scale. High local production costs frequently boost the price of locally-manufactured items above the landed cost of goods imported from Asia and elsewhere. Reductions in tariffs have increased competition for local producers and manufacturers while reducing the cost of imported raw materials.

The government repealed a 17.5 percent value-added tax (VAT) shortly after it was introduced in March 1995. The implementation of the tax was handled badly and resulted in widespread public protests and some street violence. The government has reverted to several previously-imposed taxes, including a sales tax. Government has set in motion a program to reintroduce a VAT bill and begin implementation in 1998,at a somewhat lower level thant the previous proposed tax, after an extensive public education effort.

4. Debt Management Policies

Persistent balance of payments deficits have resulted in a continuing increase in foreign indebtedness. Swings in commodity prices, especially gold and cocoa, have a dramatic impact on Ghana's export revenues. In 1996 gold accounted for about 39 percent of total export receipts, while cocoa accounted for 35 percent and timber for 9 percent. On the import side capital goods are the largest category, followed by intermediate goods, fuel, and consumer goods.

Ghana's total outstanding external debt, including obligations to the IMF, totaled approximately USD 5.4 billion at the end of the first quarter of 1997. Outstanding obligations to the IMF under medium-term facilities stood at USD 503 million at the end of the same period. At that time, outstanding long-term debt was about USD 4.2 billion (about 78 percent of total debt), of which USD 1.2 billion and USD 3.0 billion were owed to bilateral creditors and multilateral institutions, respectively.

During the last decade the stocks of both domestic and external debt have risen sharply. High domestic interest rates and the depreciation of the cedi on foreign exchange markets have caused the debt service burden in cedi terms to grow steadily. Nearly one-quarter of total government expenditures during the first half of 1997 were for the payment of interest on the public debt.

5. Significant Barriers to U.S. Exports

Import licenses: Ghana eliminated its import licensing system in 1989 but retains a ban on the importation of a narrow range of products that do not affect U.S. exports. Importers must simply sign a declaration that they will comply with the Ghanaian tax code and other laws. Ghana is a member of the WTO.

Services barriers: The Ghanaian investment code proscribes foreign participation in the following sectors: small scale wholesale and retail sales, taxi and car rental services with fleets of fewer than ten vehicles, lotteries, and barber and beauty shops.

Standards, testing, labeling, and certification: Ghana has promulgated its own standards for food and drugs. The Ghana standards board, the testing authority, subscribes to accepted international practices for the testing of imports for purity and efficacy. Under Ghanaian law, imports must bear markings identifying in English the type of product being imported, the country of origin, the ingredients or components, and the expiration date, if any. Non-complying goods are subject to government seizure. The thrust of this law is to regulate imported food and drugs; however, by its terms the law applies to non-consumable imports as well. Locally-manufactured goods are subject to comparable testing, labeling, and certification requirements. Four pre-shipment inspection agencies contracted by government also perform testing and price verification for some selected imports that are above USD 5,000.

Investment barriers: The investment code guarantees free transferability of dividends, loan repayments, licensing fees and repatriation of capital; provides guarantees against expropriation or forced sale; and delineates dispute arbitration processes. Foreign investors are not subject to differential treatment on taxes, access to foreign exchange, imports or credit.

Separate legislation covers investments in mining and petroleum and applies equally to foreign and Ghanaian investors. The investment code no longer requires prior project approval from the Ghana Investment Promotion Center (GIPC).

Government procurement practices: Government purchases of equipment and supplies are usually handled by the Ghana Supply Commission (the official purchasing agency) through international bidding and, at times, through direct negotiations. Former government import monopolies have been abolished. However, parastatal entities continue to import some commodities. The parastatals no longer receive government subsidies to finance imports. There has been a recent government directive to centralize the purchase of government vehicles.

6. Export Subsidies Policies

The Government of Ghana does not directly subsidize exports. Exporters are entitled to a 100 percent drawback of duty paid on imported inputs used in the processing of exported goods. Bonded warehouses have been established which allow importers to avoid duties on imported inputs used to produce merchandise for export. The Export Processing Zone (EPZ) Law, enacted in 1995, does not tax corporate profits for the first ten years of business operation.

7. Protection of U.S. Intellectual Property

After independence in 1957, Ghana instituted separate legislation for copyright (1961) and trademark (1965) protection based on British law. Subsequently, the government passed modified copyright and patent legislation in 1985 and 1992, respectively. Prior to 1992 the patent laws of the United Kingdom applied in Ghana. Ghana is a member of the Universal Copyright Convention, the World Intellectual Property Organization, and the English-Speaking African Regional Intellectual Property Organization. IPR holders have access to local courts for redress of grievances. Few infringement cases have been filed in Ghana in recent years. Ghana has not been identified as a priority country in connection with either the Special 301 Watch List or Priority Watch List.

Patent registration in Ghana presents no serious problems for foreign rights holders. Fees for registration vary according to the nature of the patent, but local and foreign applicants pay the same rate.

Ghana has not yet become a popular location for imitation designer apparel and watches. In cases where trademarks have been misappropriated, the price and quality disparity would be apparent to all but the most unsuspecting buyer.

Enforcement of foreign copyrights may be pursued in the Ghanaian courts, but few such cases have actually been filed in recent years. The bootlegging of computer software is an example of copyright infringement taking place locally. There are no data available to quantify the commercial impact of this practice. Pirating of videotapes is another local practice that affects U.S. exports, but the evidence suggests that this is not being done on a large scale. There is no evidence of a significant export market for Ghanaian-pirated books, cassettes, or videotapes.In summary, infringement of intellectual property rights has not had a significant impact on U.S. exports to Ghana. Pirated computer software may become a more significant problem in the future, however, as computer use grows.

8. Worker Rights

a. The Righ of Association: Trade unions are governed by the Industrial Relations Act (IRA) of 1958, as amended in 1965 and 1972. Organized labor is represented by the Trades Union Congress (TUC), which was established in 1958. The IRA confers power on government to refuse to register a trade union, but this right has not been exercised by the current government or the previous military regime. No union leaders have been detained in recent years, nor has the right of workers to freely associate otherwise been circumscribed.

b. The Right to Organize and Bargain Collectively: The IRA provides a framework for collective bargaining and protection against anti-union discrimination. Civil servants are prohibited by law from joining or organizing a trade union. However, in December, 1992, the government enacted legislation which allows each branch of the civil service to establish a negotiating committee to engage in collective bargaining for wages and benefits in the same fashion as trade unions in the private sector. While the right to strike is recognized in law and in practice, the government has on occasion taken strong action to end strikes, especially in cases involving vital government interests or public order. The IRA provides a mechanism for conciliation and arbitration before unions can resort to industrial actions or strikes.

c. Prohibition of Forced or Compulsory Labor: Ghanaian law prohibits forced labor and it is not known to be practiced. The International Labor Organization (ILO) continues to urge the government to revise legislation that permits imprisonment with an obligation to perform labor for offenses that are not countenanced under ILO Convention 105, ratified by Ghana in 1958.

d. Minimum Age of Employment of Children: Labor legislation in Ghana sets a minimum employment age of 15 and prohibits night work and certain types of hazardous labor for those under 18. The violation of child labor laws is common and young children of school age can often be found during the day performing menial tasks in the agricultural sector or in the markets. Observance of minimum age laws is eroded by local custom and economic circumstances that compel children to become wage earners at an early age. Inspectors from the Ministry of Labor and Social Welfare are responsible for enforcement of child labor laws. Employers who violate laws prohibiting heavy labor and night work by children are occasionally prosecuted.

e. Acceptable Conditions of Work: In 1991 a Tripartite Commission composed of representatives from government, organized labor, and employers established minimum standards for wages and working conditions. The daily minimum wage combines wages with customary benefits such as a transportation allowance. The current daily minimum wage is Cedis 2,000, about 90 cents at the present rate of exchange. This sum does not permit a single wage earner to support a family and frequently results in multiple wage earners and other family-based commercial activity. By law the maximum workweek is 45 hours, but collective bargaining has established a 40-hour week for most unionized workers.

f. Rights in Sectors with U.S. Investment: U.S. investment in Ghana is concentrated in the primary and fabricated metals sectors (aluminum smelting and gold mining), food and related products (tuna canning), petroleum marketing, and telecommunications. Labor conditions in these sectors do not differ significantly from the norm, save that wage scales in the metals and mining sectors are substantially higher than elsewhere in the Ghanaian economy. U.S. firms have a good record of compliance with Ghanaian labor laws.

Category	Amount
Petroleum		(1)
Total Manufacturing		(1)
Food & Kindred Products	0
Chemicals & Allied Products	0
Metals, Primary & Fabricated	(1)
Machinery, except Electrical	0
Electric & Electronic Equipment	3
Transportation Equipment	0
Other Manufacturing	0
Wholesale Trade		0
Banking		0
Finance/Insurance/Real Estate		0
Services		0
Other Industries		(1)
TOTAL ALL INDUSTRIES		219

l. Suppressed to avoid disclosing data of individual companies.
Source: U.S. Department of Commerce, Bureau of Economic Analysis

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