Ghana's Terms of Trade Deteriorating

A SURVEY conducted by the Development Finance International (DFI), the consultancy agency that has been tasked to provide technical assistance to Ghana, indicated that there has been a major deterioration in Ghana's terms of trade.

The survey, which covered the period 1999 to 2002, also revealed that Ghana's private sector is highly exposed because private sector external debt stock is about eight to ten per cent of total external debt stock, representing the debt service as 30 to 35 percent.


He said to enable the government to fulfill its commitments to the business community, donors and international organizations; good quality information from the private sector is needed where this is not available from existing official sources.


Disclosing this in a workshop on monitoring capital flows in Ghana, a senior officer of DFI, Mr. Nils Bhinda, said that to ensure sustainability after debt relief, Ghana must look at sources of finance rather than depending on donor flows.


He said during the survey it was discovered that Ghana, which is an open economy, relies heavily upon primary commodities, which tend to be vulnerable to price changes.


According to Bhinda, in 2000 when the price of cocoa crashed to a 27-year low and was not compensated for adequately by other exports, and also in 1998 when crude oil price rose threefold, it resulted in inflation, exchange rate depreciation, and slow gross domestic product.

He said that situation affects how investors perceive the investment climate and it would likely affect the decision to invest in the country.


He disclosed that as part of the government's efforts to boost the private investment and private sector led growth including small-scale business development, it has embarked on a number of medium and long-term initiatives in recent times.


Mr. Bhinda said to establish a one-stop shop for investors and promote regional development through regional offices, there has been coordination between the ministry of Private Sector Development, the Ghana Investment Promotion Centre and the Investment Advisory Committee.


He noted that the findings of the investor perception indicate a number of strengths and also, a number of areas for improvement that affects the investment decision positively.


He said the survey has succeeded in capturing information that would assist the government to meet international standards in data quality, and provide useful information to decision makers in the country.