 Stabilising
the Economy
As a long view development strategy, the government of the P.N.D.C launched an Economic Recovery Programme, (ERP) on the 21st of April 1983, to lay the foundations of a productive, sustainable and efficient economy by clarifying the prospects of wealth creation in the nation.
In over a decade of ERP, Ghana redeemed the promise to free the pent-up energies of the people, open up the economy to national growth, and pitch higher the quest for better living within a stable society. Few countries in the West African sub-region can match the credible performance by Ghana.
The IMF has hailed the achievements as setting the perfect example for the countries in the West African sub-region on how to engage in free-market economic reform and make it attractive to international investors.
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.
"Poverty alleviation and reduction is at the heart of our whole economic program. That is our key objective and we have adopted a medium term rolling program for government expenditure which we call the Medium Term Expenditure Framework (MTEF).
Under this program a more absolute and a percentage government spending has been allocated directly on poverty, particularly the social sectors of education and health.", said Mr. Kwame Peprah, the Minister of Finance .
Since the beginning of the Fourth Republic in 1992, Ghana’s Gross Domestic Product has never fallen below 3.6 per cent, but before then 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. | 
One worrying point for the economy is inflation which the government is desperately trying to bring under control. Under a very tight budget this year to make sure that government spending did not go beyond what it generated so as to stop the upward trend of inflation, Mr Peprah says, "We have made sure that we will get our monetary policy tighter, which led inflation to fall within four months from a high point of 29 per cent to 9.4 percent. But it has risen to 11.5 per cent because of external factors that are beyond our control.
Ghana’s sources of foreign exchange particularly from gold and cocoa for the last quarter of the fiscal year was put into a jeopardy because of the unexpected low world market prices for those commodities. As a result pressure was brought to bear on the exchange rate of the local currency which raised the price of the imported components in the inflation basket thus slowing the rate of decline of inflation.
"The crisis was caused by the fiscal problem engendered by the shortfall of tax revenue from cocoa and also in delayed inflows of promised dollar loans and grants. Oil it self on a normal basis is the single largest user of foreign exchange in our economy so if within six months in any year, the import bill for it doubled, it really put a strain on the exchange rate.", Mr Peprah said. |
GHANA
