 Building on Economic progress
Ghana’s forward-looking overhauling of its economy started in 1983 with an ambitious Economic Recovery Program (ERP) that was supported by the International Monetary Fund and the World Bank.
In over a decade of ERP, Ghana performed so creditably that few countries in the sub-region can compare with its herculean achievements. The IMF has hailed the performance as setting the perfect example for the countries in West African sub-region on how to engage in free-market economic reform and make it attractive to international investors.
Not only has Ghana been commended, but she has also received awards for her enviable economic success. One such award came from the US Corporate Council on Africa, a group of major US companies seeking to promote investment in Africa. At its meeting in Houston this year, they honored Ghana and President Rawlings with the "Global Market Place Award" for opening up Ghana’s economy to the world market place.
The country’s achievements also impressed the World Bank for its chosen path and the results achieved so far, which is why the bank is heavily involved in programs ranging from financial sector reform and capacity building, to schemes aimed at alleviating rural poverty.
Since the beginning of the Fourth Republic in 1992, Ghana’s current Gross Domestic Product has never fallen below 3.6 per cent, but more commonly the GDP growth has reached 5.0 per cent. Government’s projections are that by the year 2005, Ghana should attain an eight per cent growth rate that will be supported by a stable, robust and diversified economy able not only to withstand internal and external shocks but also to guarantee a respectable standard of living for the people of the country.
| To attain the projected growth rate, Ghana will have to put up a strong fight against inflation which have remained a major problem confronting the country’s economic growth. It was about 60% few years ago but has been largely brought under control. In the past two years, the government has concertedly tried to cut the rate of price rises and the Bank of Ghana has managed the economy in a more professional and disciplined manner. By the middle of 1999, inflation had been brought down to just 11 per cent, from a high point of 19.8 per cent at the beginning of the year and the government’s target of single-digit inflation for next year looks within sight.
The Governor of the Bank of Ghana (BOG) , Dr. Kwabena Duffour , seeking to consolidate the foundation laid during the last few years said there is not going to be any major shift in policy of managing the monetary side of the economy. "I don’t expect any change at all. We have medium-term programs with the IMF and the World Bank which run through a couple more years, and I don’t think we will ignore these programs for political expediency" says Duffuor. The priority of the Governor, who was adjudged one of the best Central Bank governors in the world by Euromoney for successfully steering Ghana’s economy into growth when most economies were in turmoil, would be to encourage the bridging of the trade gap and the taming of inflation, which are closely related, through the stabilization of the Cedi-Dollar exchange rate.
The performance of the cedi in 1998 is quite encouraging. It fell only an insignificant four per cent against the US dollar. Over the previous four years, the cedi’s depreciation had averaged about 25 per cent per annum. This is due to a trade in balance and also capital account investment inflow.
More importantly, the BOG has maintained a flexible exchange rate system whereby the exchange rate is determined by the forces of supply and demand. Dr. Duffour insists that the Central bank only enters the market to smoothen short term fluctuations in the exchange rate due to non economic factors. |
GHANA
