Ghana - Policies and issues of structural adjustment

Report No. 6635-GH Ghana: Policies and Issues of Structural Adjustment March 30,1617 Western Africa Region FOR OFFICIAL USE ONLY Document of the lbirld Bank This document has a restricted distribution and may be used by recipients only in the performance of their offcial duties. Its contents may not otherwise be disclosed without WorWl Bank authorization.  CURRENCY EQUIVALENTS Currency Unit Calendar 1985 From January 1986 From September 1986 US$1 054.054 090.0' 0128-156 1/ Cedi (0) 1 US$0.0185 US$0.011 US$0.0073-0.0065 FISCAL YEAR JANUARY 1 - DECEMBER 31 ABBREVIATIONS ADF - African Development Fund Cocobod - Ghana Cocoa Board ECG - Electricity Corporation of Ghana EFF - Extended Fund Facility ERP - Economic Recovery Program GHAIP - Ghana Italian Petroleum Company Limited GNPC - Ghana National Petroleum Corporation GOIL - Ghana Oil Company Limited GP&T - Ghana Posts and Telecommunications GPHA - Ghana Ports and Harbour Authority GRC - Ghana Railway Corporation GWSC - Ghana Water and Sewerage Corporation IFAD - International Fund for Agricultural Development LODP - Letter of Development Policy MFEP - Ministry of Finance and Economic Planning NATCAP - National Technical Cooperation Assessment OHCS - Office of the Head of Civil Service PIB - Prices and Incomes Board PNDC - Provisional National Defence Council SAF - Structural Adjustment Facility SAIS - Structural Adjustment Institutional Support SEC - State Enterprises Commiss-Lon SGMC - State Gold Mining Corporftion SIL - Special Import Licence SOE - State-owned Enterprise UNFPA - United Nations Fund for Population Activities VRA - Volta River Autnority 1/ A dual enchange rate system was established on September 19, 1986 when a foreign exchange auction was instituted for specified transactions. The 090 rate applied to the first window (cocoa and residual oil exports, petroleum and essential drugs imports, and central government debt service contracted before January 1, 1986); the rate on the second window was established at the weekly auction. The two rates were unified with effict from February 20, 1987; all transactions are now valued at the rate emerging in the weekly auction. In the week ending March 20, 1987, the marginal rate at the auction was 0156 = US$1.  FOR OMCIAL US ONLY GHANA: POLICIES AND ISSUES OF STRUCTUFAL ADJUSTMENT Table of Contents Page No. ECONOMIC INDICATORS FOREWORD SUMMARY AND CONCLUSIONS .......................*. i CHAPTER I - RECENT ECONOMIC DEVELOPMENTS Introduction ... . **. . *9**99*9*9***............ .................. 1 Recent Policy Measures ........................... 1 Economic Growth ............ 3 Agriculture ........ . 3 Industry .......................... 5 Services ........... ......................... 5 Savings and Investment ........, .................. 5 The Budget ....................................... 7 Money and Credit .....999 ................... ....... 8 Prices and Wages .*****........9999999999 ** *** *... 9 Balance of Payments .......... .. . .. . .. . . .. . .. . .. . . 9 Conclusion ...... . * 12 CHAPTER II - STRUCTUi'AL ADJUSTMENT ISSUES Achievements of the Eewonomic Recovery Program 13 Remaining Adjustment Tasks ....................... 13 The Government's Medium-Term Objectives 15 Incentive Policies 16 Exchange and Trade 16 Cocoa 18 Pricing Policy ........... .18 Marketing .......20 Domestic Resource Mobilization ................... 22 Financial Sector ..... . . . . . . . 22 Private Sector Investment Climate 24 Public Sector .......... 26 State Enterprise Reforms 26 Public Sector Management .................... 28 Conclusion ... 30 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.  CHAPTER III - PUBLIC EXPENDITURE PROGRAM - Introduction ...... *