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classifications and figures on 1 July. The Bank’s income categories range from low income, $995 or less; lower middle income, $996–$3,945; upper middle income, $3,946–$12,195; and high income, $12,196 or more. The categories are important insofar as they determine the lending conditions of various countries, and whether prospective borrowing countries are eligible for concessional loans. Despite the government’s classifying


itself as a lower middle income nation, the World Bank approved a $215m Poverty Reduction Support Credit (PRSC) loan to help Ghana’s fiscal stabilisation. The country has received six PRSCs from the World Bank, averaging $100 million per year.


Ghana was ranked the highest of all


West African countries in the 2010 United Nations Human Development Index (HDI) that measures heath and life expectancy, education and income. But in terms of Africa overall, Ghana was ranked 8th, and globally at 111 of the 193 countries in the world. In the HDI educational rankings that measure enrolment in school and adult literacy, Ghana was ranked 19th in Africa. Dr Kwabena Kwakye, a senior


economist at Ghana’s Institute of Economic Affairs (IEA), said that he was surprised when the government’s Gross Domestic Product estimates for 2010 were released, but added that it was likely that the economy had been undervalued as growing sectors such as telecoms and financial services had not been fully accounted for. Yet Kwakye remains sceptical about


whether Ghana could be classified as a middle income status nation on a more substantive level. “If you ask most people on the ground, they will say that they don’t feel like Ghana is a middle income country,” said Kwakye. “If you go to middle income countries like Malaysia and Singapore, Botswana and South Africa, we don’t even compare with them in terms of our infrastructure.”


The oil and gas sector In the lead-up to the commencement of oil production in December, political debate was centred on policy and legislation that would govern the oil industry. During political debates, the ruling National Democratic Congress (NDC) and the opposition New Patriotic Party (NPP), along with independents, expressed their commitment to ensuring that oil revenues be of benefit to Ghanaian citizens. The most controversial political decision was the amendment to the


New African March 2011 | 47


Revenue Management Bill and parliament’s vote to allow the anticipated oil revenues to be used as collateral for government loans. Groups such as the Civil Society Platform on Oil and Gas (CSPOG) hit out at the government over the decision, claiming that it could lead to the kind of wasteful spending on infrastructure and development projects that was characteristic of Nigeria in the 1970s, before oil prices plummeted in the early 1980s, sending the country into an economic recession. In recent months, President Atta


Mills government has borrowed significant amounts of money to fund major infrastructure projects, including $13bn worth of loan agreements with the Export- Import Bank of China. Among the projects the government has initiated thus far is the building of a railway extension from Kumasi to the border of Burkina Faso


that will cost $6bn. Other projects include a $1.5bn loan


from South Korea’s STX Business Group to begin building 200,000 low-cost houses to address the national housing shortage. Yet the World Bank estimates that the government, which owns a 13.75% stake in the now on-stream Jubilee oilfield, will generate only $1bn a year from oil through 2029. Dr Kwadwo Tutu, another economist


and research fellow at IEA, said the amendment to the Revenue Management Bill could encourage investment and economic growth. “Ghana will be fine, as long as the money does not go into recurrent expenditure (wages and salaries) but goes towards investment,” he commented, observing that opposition parties and civil society groups should ensure that the money is properly spent and accounted for.


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