ACCRA Ghana leapt into the world ranking of middle-income countries on Friday with a new measure of its economy that will add over 60 percent to its output figure by better reflecting recent growth areas such as mobile telephony.
The long-awaited move, which comes just weeks before the West African country is due start pumping oil, means its debt and deficit levels will automatically fall as a proportion of its gross domestic product.
By prodding annual per capita income above the $1,000 mark, it will also mean that Ghana leaves the World Bank's low-income bracket of countries such as Liberia and Afghanistan to join the more affluent ranks of Thailand and Ivory Coast.
"There has been a significant change in the size of the economy due to the re-basing of our national accounts which captures the realities of the current period," government statistician Grace Bediako told a news conference in Accra.
"So yes, we are there," she said of the World Bank's so-called lower-middle-income bracket. "Just that our production has to increase so that we can sustain it."
After the announcement the yield on Ghana's $750 million 2017 Eurobond eased slightly from just above six percent to 5.878 percent. The cedi was flat at 1.44 to the U.S. dollar.
The rebasing means that 2009 GDP originally measured at 22.598 billion cedis is now put at 36.867 billion cedis -- an increase of around 63 percent.
Bediako put GDP per capita for the current year at $1,318.36 provisionally against an existing estimate of $753.
Until now, Ghana used a 1993 measure of economic activity seen not fully reflecting growth in areas such as banking and telecommunications since then. The new measure is based on a 2006 snapshot that gives greater weight to those activities.
"The number is probably bigger than most people had been expecting, which was in the region of 40 percent or so," said Stephen Bailey-Smith of Standard Bank.
"It makes Ghana look better compared to its peers and it should be upgraded," he added.
ROOM FOR MANOEUVRE
By jumping into the lower end of the middle income bracket, Ghana no longer qualifies for concessional loans from the World Bank's International Development Association (IDA) arm.
However it comes just as Ghana readies to issue a new Eurobond and could allay concerns over its public finances which in August prompted Standard and Poor's credit agency to lower sovereign ratings for Ghana to "B" from "B+".
Finance Minister Kwabena Duffuor acknowledged last month that spending such as the cost of a new public sector wage deal would mean next year's budget deficit would touch 7.5 percent of GDP rather than the 3-5 percent range initially expected.
Standard Chartered's Razia Khan noted the re-basing would automatically make deficit and debt levels appear more benign but would also mean its tax revenue collection as a ratio of GDP would slide below the average for sub-Saharan African countries.
"This will call into question how much room there is for policy manoeuvre to correct this," she added.
According to the re-based index, Ghana's economy will grow by 6.6 percent in 2010, the statistics office forecast, compared to the five percent growth most analysts had been expecting.
The re-basing means the services sector now accounts for 51 percent of the economy; agriculture -- the one-time leader -- makes up 30.2 percent; and the industrial sector 18.6 percent.