US embassy cable - 04ACCRA2214

UNCLAS SECTION 01 OF 02 ACCRA 002214 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON, GH, economy 
SUBJECT: GHANA:ECONOMIC HIGHLIGHTS OCTOBER 1-NOVEMBER 5, 
2004 
 
 
1. This report covers noteworthy economic events and 
activities in Ghana for the period October 1 - November 5, 
2004. The issues covered are: 
 
-- S and P's Maintains Ghana's B Plus Rating 
-- Ghana's Corruption Score Improves 
-- FDI Numbers Also Better 
-- New Legislation to Spur Economy 
-- Gold Bringing in More Green for Ghana 
 
S and P's Maintains Ghana's B Plus Rating 
----------------------------------------- 
2. Standard and Poor's announced on October 23 that it was 
reaffirming its B plus long-term and B short term foreign and 
local currency sovereign credit ratings for Ghana.  The 
outlook continues to be stable.  In September 2003, Ghana was 
the first African country to be rated by Standard and Poor's 
under the UNDP's sovereign credit rating program.  (Note: 
During late-September meetings with DCM and EconChief, 
Standard and Poor's representatives expressed some concerns 
about Ghana's fiscal reform program, which has slipped 
somewhat during the 2004 election year.  However, this was 
compensated by HIPC Completion Point in July 2004, which will 
bring Ghana roughly USD 3.5 billion in debt relief from Paris 
Club members and the international financial institutions. 
Post also met with Fitch Rating Agency representatives in 
late September.  Fitch has not yet announced the results of 
its first year review of its 2003 "B" rating (with "positive 
outlook") for Ghana, although Fitch reps advised EconChief 
that they would likely maintain the current rating.  End 
Note) 
 
Ghana's Corruption Score Improves 
--------------------------------- 
3. Transparency International's (TI) 2004 Corruption 
Perception Index Report, published in October 2004, has Ghana 
improving slightly from last year.  The 146 countries are 
ranked on a scale of 1 to 10, with scores below 3 indicating 
rampant corruption.  Ghana scored a 3.6 this year, against a 
3.3 last year, and ranks 64th among the 146 surveyed, up from 
its 73 ranking in the 2003 TI report.  Ghana is the 7th least 
corrupt among the 26 African countries included in the survey. 
 
FDI Numbers Also Better 
----------------------- 
4. Ghana recorded USD 88.6 million in foreign direct 
investment last year, an improvement over the USD 65.37 
million in 2002, according to the UNCTAD's World Investment 
Report.  The increase has been attributed to an improved 
investment climate and renewed confidence in the Ghanaian 
economy.  Specifically, the service sector recorded 58 
projects worth USD 73.24 million and the manufacturing sector 
registered 42 investments worth USD 21.94 million.  The 
Deputy Chief Executive of the Ghana Investment Promotion 
Center (GIPC) noted that Ghana had not reached its potential 
for attracting FDI or domestic investment.  She also noted 
that the Ministry of Trade and Industry had initiated a 
Technology Improvement Program to facilitate transfer of new 
technologies to private sector operations to increase their 
production capacity and competitiveness. 
 
New Legislation to Spur Economy 
-------------------------------- 
5. At the end of October, Parliament passed the Long-Term 
Savings Scheme Bill, intended to be a framework for the 
development of a retirement oriented long term savings plan 
and to provide a vehicle for employees and employers to 
cooperate in establishing supplementary pension funds. 
Supporters hope that the scheme will not only mobilize 
savings but also generate funds as a source of long-term 
investment capital for the economy.  Parliament also passed 
the Venture Capital Trust Fund bill on November 3.  The 
scheme calls for 87 billion cedis to be used as seed money to 
spur medium and small-scale enterprises (MSE), which make up 
approximately 93 of all businesses in Ghana.  MSEs 
traditionally grapple with high interest rates that make 
increased investment unattractive.  A portion of the national 
reconstruction Levy will fund the Trust Fund. 
 
Gold Bringing in More Green for Ghana 
------------------------------------- 
6. President Kufuor announced in early November that he 
expected Ghana to earn about USD 929 million from gold 
production this year, up from USD 750 million in 2003.  He 
forecasted USD 1 billion in gold earning for 2005, saying the 
mining sector was poised to make significant contributions to 
Ghana's Golden Age of Business.  He further noted that the 
GoG wanted to broaden the mining base to include limestone, 
manganese, silica sand, natural gas, clay deposits, iron ore 
and bauxite, and the intention to add value to minerals was 
part of the GoG reasoning behind their purchase of VALCO (see 
septel on VALCO deal).  The GoG has received several large 
dividend payments recently from gold companies resident in 
Ghana, including approximately USD  2.5 million dividend 
payment from Anglogold-Ashanti and approximately USD 3.5 
million from GoldFields. 
YATES