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Ghana - Country Assistance Evaluation 1998-2003
Ghana is well endowed with natural resources as evidenced by its rich soils and favourable climate for agriculture which remains the mainstay of the economy. Agriculture accounts for 40% of the Gross Domestic Product (GDP) and employs about over half of the labour force. The service sector accounts for 33% of the GDP, while the industrial sector, including manufacturing and construction, accounts for about 27% of the GDP. Following fiscal turbulence in the 1990s, strong stabilization measures introduced in 2001 resulted in stringent controls on government spending, reduction/restructuring of domestic debt, improved public expenditure management and improved fiscal resource mobilization. Debt relief under the Highly Indebted Poor Countries (HIPC) initiative also helped in improving the fiscal position. Improvement was facilitated by higher cocoa production and favourable international prices for cocoa and gold, the two main exports. Despite the progress achieved, perennial development challenges and constraints exist which need to be addressed if Ghana is to make the transition into an era of sustained development. The constraints include low savings and investment ratios, unsustainable fiscal deficits, vulnerability to external shocks, low agricultural productivity, poor infrastructure, low literacy rates, and the continuing external debt.