World Bank Support for Ghana

1. World Bank Support for Ghana Challenges and Opportunities August 2004

2. Context • The Bank and Ghana are beginning a very important period in their partnership • Over the last 18 months (since the launch of the Ghana Poverty Reduction Strategy (GPRS) the Bank has developed an US$ 725 million program, with projects in areas ranging from education and health, to power, land administration, water and sanitation

3. Context • In addition, there is a substantial amount of donor funds being made available to Ghana, most of them through direct budget support along with the Bank’s PRSC projects • Finally, budgetary savings from the HIPC debt relief will make available around 2 percent of GDP over the next 5 years for poverty reduction expenditure programs

4. World Bank Program for Ghana (since GPRS) • PRSC 1 128 • PRSC 2 127 • Health Sector 90 • Education Sector 78 • Power Distribution (restructuring) 15 • Community-Based Rural Development 60 • Small Town Water and Sanitation 26 • Urban Water 103 • Urban Environmental Sanitation 62 • Partnerships with Traditional Authorities 5 • GEF Community Nat Resources Mgmt 1 • HIV/AIDS Treatment Acceleration Plan 10 • Land Administration 20 Total US$ 725 million

5. Poverty Reduction Support Credits (PRSCs) • Accounts for 40% of the Bank program in Ghana • US$ 250 million from the Bank in 2003 and 2004, plus another US$ 300 from the other donors • Provides funding for overall government operations, supporting wide-ranging reforms in areas such as education, health, public financial management, energy, forestry, water and sanitation

6. Poverty Reduction Support Credits (PRSCs) Expected results • Allow the Government to increase total poverty-related expenditures by 3 percent annually through 2007

7. Poverty Reduction Support Credits (PRSCs) Challenges • Budget support requires fiscal discipline and ability to control how funds are spent Opportunities • PRSCs provide direct budget support, placing the government in the driver’s seat of the development process

8. Health Sector Program • The health sector SWAp accounts for 40 percent of overall expenditure on health, or over 500 billion cedis per annum • In addition, the Ghana AIDS Response Fund provides support to programs aimed at reducing the spread of HIV infection, and impact of AIDS on those infected and their families • The Ghana AIDS strategy involves working with over 1,000 community based organizations in implementing these programs

9. Health Sector Program Expected results • Reduce regional, socio-economic and gender inequalities in health outcomes • Keep the prevalence of HIV among pregnant women below 5 percent

10. Health Sector Program Challenges • Retain qualified health care professional in the deprived areas • Reduce recent increase in infant and under five mortality rates • Cross sectoral issues that affect health outcomes, such as child malnutrition and access to safe water and sanitation

11. Health Sector Program Opportunities • New formula based budget allocation should provide additional resources to deprived areas • It should also increase local control of available resources and allow closer management of human resources

12. Education Sector Program • Education sector projects account for almost one-quarter of Bank lending to Ghana, including untied budget support • Programs supported include the National Functional Literacy project, the education component of the Partnership with Traditional Authorities project, and the recently approved Education Sector Project

13. Education Sector Programexpected results

14. Education Sector Program Challenges • Retain qualified teachers in the deprived areas • Deliver core text books to primary pupils in deprived • Increase resources for non-salary expenditures, since most of the resources (90 percent) goes for teachers salaries

15. Education Sector Program Opportunities • Elimination of school fees in deprived areas should increase enrollment rates • New budget allocation formula should increase funding available for deprived areas and ensure predictability of funding for everyone

16. Water Supply and Sanitation • Water Supply and Sanitation is a major area of emphasis for the World Bank • Lending in 2003-04 alone will reach US$206 million, accounting for almost 30% of the Bank’s program • Projects provide complete coverage, ranging from large and small towns to rural communities

17. Water Supply and Sanitation Expected Results: People Gaining Access

18. Water Supply and Sanitation Challenges • Overall weak public sector capacity • Lack of expertise in managing water companies Opportunities • Private Sector Partnerships  Private Sector Investment • Increase local control over these basic services

19. Conclusion • Ghana and the World Bank are beginning a very important moment of their partnership • The new Bank program provides substantial resources both from the Bank and from donors

20. Conclusion • These resources combined with budgetary savings from the HIPC debt relief should provide opportunities to deal with some of the country’s development challenges • The greatest opportunity is building partnerships in implementing this program