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- GDP (PPP):
- $114.7 billion
- 3.5% growth
- 7.6% 5-year compound annual growth
- $4,266 per capita
- Inflation (CPI):
- FDI Inflow:
A number of structural and institutional shortcomings still plague Ghana’s economy and hold back prospects for more dynamic economic development. Continuing fiscal deficits have pushed public debt to over 70 percent of GDP, trapping the country in a cycle of debt service and borrowing.
The high burdens of government regulation and political favoritism are a drag on overall competitiveness. A cumbersome bureaucracy dissuades potential entrepreneurs and interferes with vibrant flows of goods and services. Undermining judicial effectiveness and government integrity, corruption remains unchecked by reform measures that are not enforced effectively.
Ghana has been a stable democracy since 1992. In December 2016, President John Dramani Mahama lost his bid for re-election to Nana Akufo-Addo. Ghana is Africa’s second-biggest gold producer and second-largest cocoa producer. It is also rich in diamonds and oil. Most of its foreign debt was canceled in 2005 under the Heavily Indebted Poor Countries program, but government spending later ballooned. Coupled with plunging oil prices, this led to an economic crisis that forced the government to negotiate a $920 million extended credit facility from the IMF in April 2015. Ghana is locked in a dispute with Côte d’Ivoire over ownership of maritime oil fields, and a final ruling from an international court is expected in 2017.
Property rights are recognized and enforced, but the process for obtaining clear title to land is often difficult, complicated, and lengthy. Scarce resources compromise and delay the judicial process, and poorly paid judges are tempted by bribes. Political corruption continues to be a problem despite robust legal and institutional frameworks to combat it, active media coverage, and the government’s willingness to investigate major scandals.
The top personal income and corporate tax rates are 25 percent. Other taxes include a value-added tax, a national health insurance levy, and a capital gains tax. The overall tax burden equals 17.2 percent of total domestic income. Government spending has amounted to 28.1 percent of total output (GDP) over the past three years, and budget deficits have averaged 10.0 percent of GDP. Public debt is equivalent to 73.3 percent of GDP.
Recent years’ reforms have yielded reductions in the number of bureaucratic procedures, but the overall process for establishing and running a private enterprise is cumbersome. Labor regulations remain restrictive and outmoded. The government slashed electricity and water subsidies late in 2015 and reduced fuel subsidies early in 2016, but the approach of the November 2016 elections increased populist spending pressures.
Trade is important to Ghana’s economy; the value of exports and imports taken together equals 99 percent of GDP. The average applied tariff rate is 10.0 percent, and foreign investment in several economic sectors is restricted. The financial system has undergone restructuring and transformation, and the supervisory framework is relatively strong. Bank credit to the private sector has increased, and capital markets are developing.