Ghana's economic outlook

Ghana's economy has been facing significant challenges due to the falling global cocoa prices, impacting the government's current account balance. The country's Minister of Finance, Ken Ofori-Atta, has outlined measures aimed at reducing the budget deficit from 9 percent to 6.5 percent and increasing growth rates from 3.6 percent to 6.3 percent by the end of 2017 under the leadership of President Nana Akufo-Addo. Economist John Gatsy from the University of Cape Coast shed light on the situation during an interview on CNBC Africa. The impact of the declining cocoa prices on Ghana's economy is a cause for concern, as cocoa represents a significant portion of the country's exports and foreign reserves. Ghana's unique approach to trading cocoa, with over 50 percent being treated on a derivative basis, provides some level of protection from price fluctuations in the global market. However, the recent decision by the government to eliminate bonuses and avoid increasing the producer price for cocoa farmers has immediate negative effects on the economy. Ghana signed a cocoa deal on June 2nd to address the falling prices and foreign pricing concerns. Progress on this front remains uncertain, with Gatsy suggesting that the government needs to show more urgency in finding solutions. Unlike Côte d'Ivoire, Ghana has yet to prioritize value addition to its cocoa products before export, leaving it vulnerable to international pricing mechanisms. As a result, the challenges stemming from the cocoa price decline are likely to persist unless strategic changes are implemented to enhance the value chain and ensure sustainable returns for Ghana's cocoa industry.