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Address Delivered by Hon. Dr. Kwabena Duffuor at the Cocoa Trade Finance Agreement Signing Ceremony

I am deeply honoured and indeed privileged to have the opportunity to once again address this gathering for the signing of USD1.5 billion receivables-backed trade finance for the purchase of cocoa in the 2012/2013 cocoa season. On behalf of His Excellency, President John Dramani Mahama, Government, and the people of Ghana, I wish to express my profound gratitude to our financiers, both local and foreign, for the confidence shown in the Ghanaian economy in general and the cocoa industry in particular.

Ladies and Gentlemen, permit me to share with you a few thoughts about our dear country and the economy which I believe will be of interest to investors like you. First, as some of you may know, Ghana has stood out for its peaceful and stable democratic governance. The country has established its reputation as one of Africa’s most stable and democratic states. Indeed, Ghanaians have frequently demonstrated that they cherish democracy. The parliamentary and presidential elections in December this year will give the country another chance to reassert its stable and democratic credentials.

Second, Ghana’s political maturity has also been matched by the strength of the economy in recent years. The country has maintained macroeconomic stability in spite of pressures from the global economic environment and the recent volatility in the domestic foreign exchange market. Gross domestic product (GDP) grew by 14.4% in real terms in 2011, making the country one of the fastest growing economies in the world. The provisional estimate of real GDP growth in the first quarter of this year is 8.7%.

Ghana’s fiscal deficit has shrunk significantly since 2008 and stood at 4% of GDP in 2011, supported by a remarkable revenue performance and prudent expenditure management. Inflation has been kept in single digit continuously for over 25 months and is expected to be kept relatively stable in the remaining period of 2012, ending the year with still a single digit. The recent depreciation of the value of the domestic currency, reflecting excess demand for foreign exchange, has been reined in after the Central Bank had introduced several measures including raising the money market rates to shift investor preference to money market instruments.

Third, in the past, the country’s fiscal deficits have been particularly high in election years, followed by painful adjustments in subsequent years. To break the cycle, the NDC Government has committed itself to fiscal consolidation, and our ministries, departments, and agencies have been instructed to guard against unbudgeted expenditures and recognize the need for fiscal responsibility.

Ladies and Gentlemen, government is determined to manage the situation in spite of the election challenges. The economic fundamentals remain very strong and investors’ confidence in the economy continues to grow. This is exemplified by the performance of the 3-year and 5-year bonds issued by the government in recent months.

The sharp drop in the coupon rates of the government’s long term securities and the Euro bond in the secondary market is a reflection of strong economic fundamentals in place which has given rise to the huge appetite that both domestic and foreign investors’ have for Ghanaian risks.