US embassy cable - 05ACCRA248

C O N F I D E N T I A L SECTION 01 OF 02 ACCRA 000248 
 
SIPDIS 
 
DEPARTMENT PLEASE PASS TREASURY FOR ALEX SEVERENS 
MCA FOR ROD NORMAN 
 
E.O. 12958: DECL: 02/01/2015 
TAGS: ECON, EFIN, ENRG, EPET, GH 
SUBJECT: AMBASSADOR MEETS WITH MINISTER-DESIGNATE FOR 
FINANCE 
 
 
Classified By: Ambassador Mary C. Yates for Reason 1.5 (B/D) 
 
1. (SBU) Summary: On January 26, 2005 Minister)designate for 
Finance and Economic Planning, Kwadwo Baah-Wiredu and Acting 
Minister of State for Economic Planning, Dr. Nii Ashong paid 
an informal visit on the Ambassador to express appreciation 
for the U.S. Government,s (USG) support to Ghana.  The USAID 
Director participated as well.  The Ambassador and 
Baah-Wiredu discussed the treatment of American investors, 
deregulation of the petroleum sector, inflation, the use of 
remittances, and the Millennium Challenge Account (MCA). 
Baah-Wiredu welcomed the Ambassador,s offer to arrange a 
joint briefing with the Ghana MCA working group and U.S. 
Embassy staff on the MCA.  The Ambassador also explained the 
current state of the U.S. Treasury Department's programs in 
Ghana. End Summary. 
 
2. (SBU) Baah-Wiredu requested the appointment prior to 
confirmation as Minister of Finance and Economic Planning 
(MoFEP), indicating he intends to be active.  The former 
Minister of Education, Youth and Sports appeared relaxed and 
confident in his new role.  He expressed sincere appreciation 
for the USG's support of Ghana,s development, adding that he 
had personally benefited from the USG's generosity.  He 
extolled his Peace Corps teachers. 
 
3. (U) In the context of discussing ways for Ghana to grow 
its economy and utilize its young people, the Ambassador 
expressed the need to improve the investment climate in 
Ghana.  The Ambassador said that, though significant progress 
has been made, there was still much to do.  The Ambassador 
cited specific bureaucratic difficulties American investors 
were having, including a company which currently employs many 
educated Ghanaian youth.  She said that more investment would 
be attracted if the treatment of current investors improved. 
 
4. (C) Baah-Wiredu said that he met with President Kufuor 
January 25 to discuss fuel subsidies.  He stated that the 
government was committed to moving forward with deregulation 
of the petroleum sector.  Although it would pose a hardship 
on the population, the government was working to mitigate the 
effects and provide a safety net for the poor.  Baah-Wiredu 
stated that he did not anticipate much dissension when the 
prices rise because there has been so much talk about the 
increases and the population expected it to come some time 
ago.  NOTE: Sources within the GoG claim prices could be 
raised as much as 45 percent by the end of February 2005, 
which should cause a temporary increase in the inflation 
rate.  The price increase may cover the cost of production, 
but the cost at the pump will still be regulated.  END NOTE. 
 
5. (C) COMMENT: Ghanaian interlocutors, especially with the 
opposition, have expressed concern that this time fuel 
increases could be "explosive" with the population. 
Opposition flag-bearer and twice-defeated presidential 
candidate, Prof. Atta Mills told PolChief February 2 that he 
expected social unrest and that he "would not stand in their 
way".  END COMMENT. 
 
 
6. (SBU) The Minister-designate raised the issue of tapping 
the potential diaspora remittances that were reputed to be 
USD 2 billion last year to stimulate economic growth.  The 
Ambassador suggested Ghanaians in the diaspora might be 
encouraged to invest not only their money but also their 
skills in the country.  She indicated that one ministry could 
be held responsible for creating a one-stop shop to eliminate 
the red tape that currently frustrates highly skilled 
Ghanaians who had tried to return to the country to 
participate in its development. The USAID Director mentioned 
that USAID planned to support a study on remittances from the 
Ghanaian diaspora and the financial institutions that 
transfer them. 
 
7. (SBU) The Ambassador asked if President Kufuor had 
indicated whether the responsibility for the preparation of 
the MCA proposal would continue to rest with the MoFEP. 
Baah-Wiredu said that the President is committed to ensuring 
that the process moves forward swiftly and will not make 
changes in this respect.  The USAID Director asked whether 
London-based consultant, Michael Ansah, engaged by the GoG to 
lead the MCA proposal's development, would remain on the 
team.  Baah-Wiredu confirmed that he would. The Ambassador 
offered to conduct a joint briefing with the Ghana MCA 
working group and Embassy staff to inform the 
Minister-designate and any new staff about the MCA. 
Baah-Wiredu agreed a briefing, which is currently scheduled 
for February 11. 
 
8. (SBU) The Ambassador also mentioned that USAID and the 
U.S. Treasury Department planned to replace the departing 
Debt Advisor by May 2005.  However, there were insufficient 
funds to extend the U.S. Treasury technical assistance and 
training in tax administration.  She advised that the German 
Government and Swiss Government had planned tax programs that 
could fill the gap. 
YATES