THE EXTERNAL SECTOR IN GHANA
Exports in the country seem to have seen remarkable increments. From $896.8m in 1990, exports have sums above the $1bn mark since 1993, gradually climbing to a decade high of $2.012bn in 1999. The provisional figure for 2000 of $1,940.5m falls short of the remarkable improvements made in the export sector. Improvements in this sector can be attributed to the export diversification and liberalization of the export sector started during the ERP in the 1980's. The gradual movement away from a single major export earner (cocoa in the Ghanaian case) to a variety of products including non traditional exports made up of handicrafts, agricultural non traditional products, wood and wood products as well as some processed and semi-processed products cannot be overemphasized. ISSER 2001 maintains the number of processed and semi processed products to be 189 as at 2000.However, the improvements in exports have not succeeded in reducing the trade balance, as imports have also been rising alongside the exports. Imports have been well above the $1bn mark. From 1997, however, there has been a leap into the $2bn region. With 1999 recording the highest import value for the decade of $3,288.1m as well as a high trade deficit of $1.216bn. This is the only year that the trade balance exceeded $1bn during the period under review. 'The year 1999 is particularly significant in terms of trade and payments.' (ISSER 2000 p. 58). The liberalization of imports and the country's dependence on manufactures and spare parts from the west, poor harvests and storage facilities for agricultural products among others has made the country an import dependent country and the high import elasticities tend to prove this point.
Private transfers have also seen a rising trend, which some social commentators have attributed to the fact more private transfers now pass through official channels.
The capital account has also not fared poorly, with 1993 recording a high surplus of $631.1m. The balance of payments overall balance has, however, been mixed. 1990, 1991, 1993-5, and 1997-8 have seen a good performance recording an overall surplus, with 1995 achieving the highest surplus of $249.1m. The remaining years 1992, 1996, and 1999-2000 have recorded deficits with 2000 recording the largest deficit of $194.7m. ISSER attributes this performance to export receipts and official transfers. 'The balance of payments outturn was less favourable than anticipated due to lower than expected export receipts and declining official transfers' (ISSER 2001 p. 83).
Moving on to exchange rates, the country's major trading currencies; the US Dollar, Pound Sterling, Deutsche Mark, French Franc, Japanese Yen, Swiss Franc and Euro (3) have performed very strongly against the Ghanaian Cedi. In the year 2000, however, the Cedi recorded a poor performance against the major currencies compared to the previous years. According to ISSER the Cedi recorded an overall depreciation of 49.8% on the interbank market in 2000. This is attributed to the lack of monetary and fiscal discipline in the year in question as well as it being an election year. ISSER has attributed this performance to, 'The less than expected receipts from exports due to poor prices for cocoa and gold and the limited inflow of grants affected the foreign exchange market.' (ISSER 2001, p. 79) (emphasis mine). They go further on to add that, 'The lower produce prices and the reduced receipts resulted in less than expected quality of foreign currency in the interbank market in particular but also in the foreign exchange bureau. (Ibid.) (emphasis mine).
Be Sure to Continue to Page 4 of "Democracy and Development in Ghana: A Look at Eight Years of NDC Rule ".
