Ghana achieves low overall compliance with international standards and codes, with a score of 25.0 out of 100 in our Standards Compliance Index. Ghana's compliance under all three categories -- macroeconomic fundamentals, market infrastructure and financial supervision -- is low. Standards most in line with international requirements have earned a rating of "enacted." These include corporate governance, banking supervision and securities regulation. The 2004 Banking Act has strengthened the regulatory framework for the banking sector, and the 2003 Financial Sector Strategic Plan includes reforms to make securities supervision more robust. However, Ghana is non-compliant in the areas of data dissemination, auditing, and money laundering. Furthermore, publicly available information is not sufficient to assess Ghana's compliance with international standards in the areas of monetary policy transparency, the insolvency framework, and payment systems. Ghana has, however, launched the adoption of the International Financial Reporting Standards, and the passage of the Insurance Act signals limited progress towards compliance.

Macroeconomic Policy and Data Transparency

Ghana is not a subscriber to the International Monetary Fund's (IMF) Special Data Dissemination Standard (SDDS). Ghana, however, does participate in the IMF's less stringent General Data Dissemination System (GDDS). In 2007, the IMF judged that Ghana's provision of data is adequate for the purpose of surveillance, but that improvements were needed in both quality and timeliness. In addition, improvements were required in public accessibility to data and in the information provided to the IMF for publication. One significant improvement noted by the 2007 IMF report was the publication on the Bank of Ghana's website of its Monetary Policy Committee Statement and other statistical releases. More »

The 2002 Bank of Ghana (BoG) Act created the Bank of Ghana and establishes its independence from government manipulation. It also created the conditions for the establishment of the Monetary Policy Committee, which is responsible for developing and implementing monetary policy. At present the primary goal is price stability, and the principle method for achieving this goal is a form of inflation targeting. According to the 2007 Article IV Consultations report of the International Monetary Fund (IMF), the BoG has improved transparency and public accessibility of monetary policy decisions and data with the regular publication of Monetary Policy Committee statements and other statistical releases on its website. However, issues of timeliness, quality, and reliability of data upon which policy is based remain to be addressed. Overall, there is insufficient publicly available information regarding Ghana's compliance with the IMF's Monetary Policy Transparency Code. More »

The last International Monetary Fund (IMF) Report on the Observance of Standards and Codes (ROSC) for Fiscal Transparency was carried out for Ghana in 2004. This report concluded that Ghana's has made significant progress in improving fiscal transparency and meets the IMF's Code in several areas. However, important shortcomings remain in the area of budget documentation, consolidation of budget spending and internal and external audits. In the same year, the World Bank conducted a Country Financial Accountability Assessment, which also noted recent improvements, particularly in the area of legislation and regulation, but added that Ghana fell short in the areas of implementation and compliance. According to the World Bank report, some of the problem can be attributed to insufficient resources and management practices to implement a complex system of reforms. According to the Open Budget Index for 2006, Ghana scores 42%, earning it the designation of "some openness." Of the seven budget documents tracked by the project, Ghana produces five, only two of which are made publicly available. More »

Institutional and market infrastructure

According to a 2005 Memorandum of Economic and Financial Policies of the Government of Ghana, the Ghanaian authorities plan to pass an Insolvency Bill and Companies Code that will address the lack of clarity regarding the rights of both creditors and borrowers. According to the U.S. Department of Commerce's 2007 edition of its Country Commercial Guide to doing business in Ghana, there is as yet no bankruptcy law on the books. The Bodies Corporate (Official Liquidations Act) constitutes Ghana's insolvency regime. The Companies Code specifies procedures for debt collection. The World Bank's 2007 "Doing Business" evaluation of Ghana discloses that, in the sphere of business closings, Ghana does somewhat better than the regional averages, but significantly underperforms in comparison with the average experienced by members of the Organization for Economic Cooperation and Development (OECD). In Ghana, it takes an average of 1.9 years to close a business, at an average cost of 22%, and with an average recovery rate of $0.24 on the dollar. This compares with a regional average of 3.4 years, 20%, and $0.171 on the dollar. The average performance experienced by members of the OECD is 1.3 years, 7.5%, and a recovery rate of $0.741 on the dollar. However, there is insufficient information publicly available as to Guatemala's compliance with the Principles and Guidelines for Effective Insolvency and Creditor Rights Systems developed by the World Bank. More »

A 2004 assessment of the accounting and auditing environment in Ghana conducted by the World Bank noted that the regulation of accounting practices was somewhat weak and recommended strengthening the statutory framework, enforcement mechanisms, and professional education in the field of accounting. It also recommended adoption of International Financial Reporting Standards (IFRSs) without any modifications, in place of the existing Ghana National Accounting Standards (GASs). The World Bank pointed out that GASs are based on a mid-1990s version of IFRSs (then International Accounting Standards, or IASs) and hence are outdated and differ significantly from their international counterparts. Other major recommendations included the creation of an independent oversight body responsible for the process of adoption and enforcement of accounting and auditing standards based on international equivalents for public interest entities and developing simplified reporting requirements for the Small and Medium-size Enterprises (SMEs). In line with the World Bank recommendations, in January 2007 Mr. Kwadwo Baah-Wiredu, Minister of Finance and Economic Planning of Ghana, formally announced the launching of Ghana's adoption of IFRSs, thereby replacing the local GASs. IFRSs became applicable for all listed companies, government business enterprises, banks, insurance companies, security brokers, pension funds, and public utilities. Starting in 2009, all other entities including SMEs will be also required to use IFRSs. More »

According to the World Bank's 2005 Report on the Observance of Standards and Codes (ROSC) for corporate governance in Ghana, the recent performance of Ghana's capital market demonstrates its potential. However, challenges remain because of its weak institutional foundation and capacity and enforcement gaps. The 2005 World Bank ROSC reports that the improvement of Ghana's capital markets is more dependent on increasing the institutional capacity of the regulators, administration, and judiciary than on reforming the legal framework. Recommendations to improve corporate governance include upgrading the institutional framework, continuing to review and modernize legislation, spreading awareness of the importance of corporate governance, establishing active and independent boards, and improving disclosure. Listed companies are subject to the Companies Act of 1963, the Ghana Stock Exchange listing rules, and the Securities Industry Law of 1993, which was amended by the Securities Industry Act of 2001. The SEC issued a voluntary Code of Best Practices on Corporate Governance, but a company's compliance with the code must be included in its annual report. The 2005 World Bank ROSC indicates that although few companies report on their compliance with the Code, company compliance with the Code has improved. More »

According to an assessment of the accounting and auditing environment in Ghana conducted by the World Bank in 2004, although Ghana's National Standards on Auditing (NASs) are based on the International Standards on Auditing (ISAs), they are "outdated" and not in line with current international standards. Furthermore, the assessment pointed out that, with the exception of the banking sector, compliance with the existing NASs was weak, due to inadequate enforcement mechanisms. One of the World Bank's major recommendations was the creation of an independent oversight body responsible for the process of adoption and enforcement of accounting and auditing standards based on international equivalents for public interest entities. The World Bank also recommended developing simplified reporting requirements for the Small and Medium-size Enterprises. Although Ghana adopted International Financial Reporting Standards in January 2007, there is insufficient publicly available information as to whether Ghana plans to adopt ISAs as well. More »

According to two reports by the International Monetary Fund (IMF) in 2003 and 2005 respectively, the lack of Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) legislation in Ghana affects both its reputation and its ability to fight the abuse of its financial system by money launderers. The 2005 U.S. Department of State (DoS) report observed that, as of August 2005, the banking sector lacked a strong regulatory framework to prevent money laundering and other suspicious transactions. Further, according to the same report, Ghana had also not shown much diligence in passing AML legislation that had been under review for several years. The Bank of Ghana (BoG) website states that as of 2007 an AML Bill is in Parliament and still awaits approval. Both the IMF and DoS report to the fact that Ghana has been procrastinating on developing a legal framework against money laundering and terrorist financing. A 2003 joint report by the International Bank for Reconstruction and Development and the IMF notes that the law enforcement agencies responsible for preventing money laundering and terrorist financing are the police, the Bureau of National Investigations, the Serious Fraud Office, the Customs, Excise and Prevention Service, the Immigration Service, the Attorney General and Ministry of Justice, and the courts. The financial sector regulators are the BoG, the Securities Exchange Commission, and the National Insurance Commission, and these agencies have the power to investigate suspicious transactions, which they then report to the appropriate law enforcement bodies. More »

According to the Bank of Ghana (BoG) website, Ghana's high value payment system, the Ghana Interbank Settlement (GIS) system is a real-time gross settlement system operated and overseen by the BoG. The main laws governing payment instruments, institutions, and clearing and settlement systems are the Bank of Ghana Act of 2002, the Payment Systems Act of 2003, and the Bills of Exchange Act of 1961. The BoG website asserts that these laws are in line with the Core Principles for Systematically Important Payment Systems (CPSIPS). A 2007 IMF report on Ghana observes that the country has embarked on a financial sector development plan with IMF assistance, which includes an upgrade of its payments system infrastructure. The reform encompasses using the latest technology, making ATMs interoperable, enabling the electronic processing of payments and the use of "smart cards," and making the payments system more widespread and accessible to rural areas. The BoG also mentions the agreement between the BoG and the Ghana Association of Bankers to establish the Ghana Interbank Payments and Settlement System (GIPSS) - an independent entity responsible for the management and oversight of the different aspects of Ghana's payment and settlement system infrastructure. However, there is insufficient information publicly available as to Ghana's actual compliance with the CPSIPS. More »

Financial Regulation and Supervision

The International Monetary Fund (IMF) in its 2003 Financial Sector Stability Assessment (FSSA) Update mentions the results of a 2000-2001 Financial Sector Assessment Program (FSAP) for Ghana, which was not published. The 2003 FSSA Update indicated that Ghana had a high degree of compliance with the Basel Core Principles for Effective Banking Supervision. Nonetheless, the report also pointed to several significant shortcomings, particularly in the legal framework. These include the lack of operational independence of the banking sector supervisor, the Bank of Ghana (BoG); political interference from the Ministry of Finance and Economic Planning; inadequate information sharing among supervisors; weak supervision of foreign branches of domestic banks; the absence of anti-money laundering legislation; and the lack of rules on consolidated supervision. According to the 2003 FSSA the passage of the Banking Act would rectify most of the shortcomings pertaining to the legal framework. This bill was passed in 2004 as Banking Act No. 673. The IMF's 2007 Article IV Consultation report on Ghana notes that the regulatory environment in Ghana for banking supervision is largely adequate and the banking sector is well-capitalized, liquid, profitable, and meets international capital adequacy standards. The report also mentions that a BoG self-assessment indicated that Ghana has incorporated the IMF's FSAP recommendations. More »

An unpublished 2001 Financial System Stability Program conducted by the International Monetary Fund (IMF) found that Ghana exhibited a high degree of observance of the International Organization of Securities Commission (IOSCO) Objectives and Principles of Securities Regulation. However, significant shortfalls were observed in several areas. Since then, the 2003 IMF Financial Systems Stability Assessment (FSSA) Update found that significant improvements had been made and that securities regulations were continuing to be updated. However, further progress is necessary to be in line with best practices. The 2005 World Bank Report on Standards and Codes on Corporate Governance observed that further improvements in Ghana's capital markets will depend more on increasing the institutional capacity of the regulators, administration, and judiciary than on reforming the legal framework, since there are weak institutional foundations and capacity and enforcement gaps. According to Ghanaian authorities, cited in the 2007 IMF Article IV Consultation, Ghana has fulfilled the recommendations of the IMF's 2003 FSSA Update. The Financial Sector Strategic Plan includes reforms to further strengthen the financial sector, which are being supported by the World Bank's Poverty Reduction Support Credits and Economic Management Capacity Building project. More »

The National Insurance Commission (NIC) is the regulator of Ghana's insurance sector and has under its supervision insurance and reinsurance companies, as well as insurance brokers and agents. The 2000-2001 Financial Sector Assessment Program (FSAP) conducted by the International Monetary Fund (IMF) and the World Bank evaluated Ghana's observance of the International Association of Insurance Supervisors (IAIS) Insurance Core Principles (ICPs). The IMF mentions the results of the 2000-2001 FSAP, which was not published, in its 2003 Financial Sector Stability Assessment (FSSA) Update. The 2000-2001 FSAP found that Ghana exhibited only a weak degree of observance of the principles. The FSAP therefore recommended that Ghana update its legislative framework to bring it into compliance with more IAIS principles. The 2003 FSSA Update found that Ghana had made limited progress in implementing the 2001 recommendations, due to inadequate legislation and the limited resources of the NIC. It was mentioned, however, that a draft insurance bill was in the works that would address some of the weaknesses noted by the 2000-2001 FSAP. A 2005 IMF report noted that Ghana had strengthened the supervisory and inspection powers of the NIC and was still in the process of reviewing its Insurance Law, which was expected to further strengthen the authority of the NIC. A 2007 IMF report mentions that, with the passage of the Insurance Act and other legislative reforms, the NIC was provided with more resources, and Ghana's overall legislative framework for supervision and financial risk-assessment was brought into line with international standards. However, there is insufficient publicly available information as to whether the adoption of the Insurance Act has changed Ghana's compliance with ICPs. More »

Legend:

Credit Ratings

Moody's Not rated

Fitch B+/Stable

Standard & Poor's B+/Stable

Macroeconomic Data

2007 GDP (Current Prices): 14.9 billion USD (IMF)

2007 GDP (Per Capita): 676 USD (IMF)

2008 GDP (Growth Forecast): 6.9% (IMF)

2008 Inflation (CPI): 8.9% (IMF)

2007 Unemployment: 11% (CIA)

2006 Foreign Direct Investment

FDI (Inward): 0.435 billion USD (UNCTAD)

FDI (Outward): N/A billion USD (UNCTAD)

2006 Official Development Assistance

ODA (Received): 1176 million USD (OECD)

ODA (Disbursed): N/A million USD (OECD)