Ghana - Policies and program for adjustment (Vol. 1 of 2) : Main report

Report No. 4702-GHCl Ghana r& , Policies and Program for Adjustment Volume I The Main Report October 3,1983 Western Africa Region Programs 1, Division B FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Februrary 1973 - June 18, 1978 US$1 = 01.15 01 = US$0.87 August 26, 1978 US$1 = 02.75 01 = US$0.36 FISCAL YEAR Prior to 1983 - July 1 to June 30 After 1983 - January 1 to December 31  FOR OFFICIAL USE ONLY ABBREVIATIONS AGF - Ashanti Goldfields BOG - Bank of Ghana CBS - Central Bureau of Statistics ECG - Electricity Corporation of Ghana GCMB - Ghana Cocoa Marketing Board GIHOC - Ghana Industrial Holding Company GOG - Government of Ghana GOIL - Ghana Oil Limited GTMB - Ghana Timber Marketing Board GWSC - Ghana Water and Sewer Corporation MFEP - Ministry of Finance and Economic Planning MISSA - Middle Income Sub-Saharan Africa NFPB - National Family Planning Board PDC - Peoples' Defence Committee PIB - Prices and Incomes Board PNDC - Provisional National Defence Council PPAG - Planned Parenthood Association of Ghana SGMC - State Gold Mining Company TYIP - Three Year Investment Program VALCO - Volta Aluminium Company VRA - Volta River Authority WDC - Workers' Defence Committee This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   GHANA: POLICIES AND PROGRAM FOR ADJUSTMENT VOLUME I THE MAIN REPORT Table of Contents Page No. ECONOMIC INDICATORS SOCIAL INDICATORS FOREWORD SUMMARY AND CONCLUSIONS ............................................. -i PART I THE ECONOMY SINCE 1970 Chapter 1. Growth and Efficiency ....... ............. 1 Chapter 2. External Sector ....................... . 6 Chapter 3. Domestic Resources ........................... 19 Chapter 4. Human Resources and Social Development ....... 26 PART II POLICIES AND PROGRAM FOR ADJUSTMENT Chapter 5. The Problem and the Nature of Response ....... 34 Chapter 6. The Government's Response to Economic Crisis; Short-term Stabilization Phase ....... 38 Chapter 7. Economic Rehabilitation Phase - Macro Aspects ............... , 46 Chapter 8. Economic Rehabilitation Phase - Sectoral Aspects ............ O-* .......... 58 Chapter 9. Liberalization and Growth Phase ............. . 68 MAP VOLUME II STATISTICAL APPENDIX BACKGROUND PAPERS - REVIEW OF MAJOR SECTORS (available on request) I. Cocoa Sector II. Agriculture, Mining, Energy and Transport Sectors III. Manufacturing Sector IV. Economic Consequences of Population Growth  LIST OF TEXT TABLES Table Page No. 1. Indicators of Growth, Efficiency and Distortions .... ............ 3 2. Summary of Balance of Payments 1970-82. 7 3. Foreign Trade Indicators 1970-81 .8 4. Annual Average Growth of Exports 1960-70 and 1970-80 .10 5. Appreciation of Real Effective Exchange Rate 1973-81 .11 6. Cocoa Sector Domestic Terms of Trade 1970-81 .12 7. Selected External Debt Indicators 1970-82 .18 8. Investment and Saving 1970-82 .19 9. Public Finance Indicators 1970/71-82 .21 10. Estimated Tax Buoyancies and Elasticities ....................... 23 11. Basic Needs Indicators 1960 and 1980 ............................ 28 12. Exchange Rate System 1983 ....................................... 39 13. Agriculture Producer Prices 1983 ................................ 40 14. Summary of Government Budget 1983 ............................... 42 15. Three Year Investment Program 1984-86 ........................... 50 16. Macroeconomic Projections 1983-90 ............................... 51 17. External Capital Requirements 1983-90 ........................... 55 18. Indicators of Aid and Total Resource Flow 1979 .... .............. 57 LIST OF CHARTS 1. Relative Cost of Imports ......... .................... 16  ECONOMIC INDICATORS GNP PER CAPITA IN 1982: US$360 1/ GRDSS NATICNAL PRODUCr IN 1982 ANUAL RAIE OF GROWI (%, Constant Prices) Cedis Min. % 1977-82 GNP at Iarket Prices 113,240 100.00 -0.86 Gross Domestic Investment 1,472 1.3 -16.4() Gross National Saving 1,585 1.4 -16.45 Current Account Balance -16.6 -0.09 -- Export of Goods, NFS 2009.0 1.77 -9.44 Inport of Goods, NFS 1959.0 1.73 -20.22 OUlPI AND IABDR FORCE Output in 1982 labor Force, 1982 Cedis Min. % Min. % Agriculture 44,031 51.28 2.509 57.2 Industry 6,440 7.50 0.671 15.3 Services 35,395 41.22 1.206 27.5 Total 85,866 100.0 4.386 100.0 GOVERN4N FINNCE _Central Government Cedis Min. % of GDP in 1981 Cedis Min. %ofGDP in 1982 Total Revenme and Grants 4,855.3 6.33 5253.2 6.12 Total Expenditure and Net Lending 9,702.9 12.66 9220.1 1.0.74 Overall Deficit (-) -4,847.6 -6.32 -3966.9 -4.62 MOEY, CREDIT AND PRICES 1976 1977 1978 1979 1980 1981 1982 Money and Quasi-oney 1,903 3,044 5,131 5,942 7,949 12,029 15,072 Bank Credit to Public Sector 1,966 3,203 5,636 6,537 8,481 14,043 1,714 Barlk Credit to Private Sector 385 560 739 796 940 1,342 1,558 (Percentages or Index Numbers) Money and Quasi-noney as & of GDP 29.2 27.3 24.4 21.1 19.4 15.7 17.6 General Price Index (1977=100) 46.2 100.0 173.1 267.3 401.2 868.6 1062.4 I/ Staff estinate September 1983  BAIANE OF PAMENTS 2CHANDIS1 EXPORTS (AVERAG 1978-82) 1980 1981 1982 4. US$ Mn. X (US$ million) Cocoa Bearn; & Products 654.5 72.9 Trade Balance 184.3 22.3 98.2 Timber Logs & Products 38.2 4.3 Exports 1208.9 766.3 627.2 Gold 135.1 15.0 Inqorts -1024.6 -788.7 -529.0 Diamonds 10.3 1.1 Ynganese 9.6 1L1 Invisibles (Net) -168.0 -140.4 -114.8 All Other Goods 50.1 5.6 Services -247.7 -223.3 -197.2 Transfers 79.7 82.9 82.4 Total 897.8 100.0 Current Balance 16.3 -162.7 -16.6 Capital Accounts Official Capital (Net) 187.9 57.3 149.7 EIXERAL DEBS, DECEMBER 1982 - Private Capital (Net) 19.8 26.3 31.7 Arrears Payments 78.9 141.4 35.2 US$ M.n Overall Balance 81.5 -262.5 56.4 Total Outstanding and Gross International Disbursed M&LT 1648.6 Reserves (Erd of Period) 197.6 189.8 223.9 Total Outstandling and Disbursed incl. Short-tern 1163.6 February 1973 - June 18, 1978 DEBT SERVICM RATIO FOR 1981 US$ = 01.15 % Since August 26, 1978 Total Outstanding and US$ =