AMBASSADOR MEETS WITH MINISTER-DESIGNATE FOR

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