GHANA:ECONOMIC HIGHLIGHTS OCTOBER 1-NOVEMBER 5,

UNCLAS SECTION 01 OF 02 ACCRA 002214

SIPDIS

E.O. 12958: N/A
TAGS: ECON GH
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