Formed from the merger of the British colony of the Gold Coast and the Togoland trust territory, Ghana in 1957 became the first sub-Saharan country in colonial Africa to gain its independence. A long series of coups resulted in the suspension of Ghana's third constitution in 1981 and a ban on political parties. A new constitution, restoring multiparty politics, was approved in 1992. Lt. Jerry RAWLINGS, head of state since 1981, won presidential elections in 1992 and 1996, but was constitutionally prevented from running for a third term in 2000. John KUFUOR, who defeated former Vice President John ATTA-MILLS in a free and fair election, succeeded him.
The tables below display average monthly climate indicators in major cities based on 8 years of historical weather readings.
Temperature by: Centigrade
ACCRA 5 60 N, 0 16 W, 226 feet (69 meters) above sea level.
KUMASI 6 71 N, 1 60 W, 961 feet (293 meters) above sea level.
TAKORADI 4 88 N, 1 76 W, 29 feet (9 meters) above sea level.
Ghana's population is concentrated along the coast and in the principal cities of Accra and Kumasi. Most Ghanaians descended from migrating tribes that probably came down the Volta River valley at the beginning of the 13th century. Ethnically, Ghana is divided into small groups speaking more than 50 languages and dialects. Among the more important linguistic groups are the Akans, which include the Fantis along the coast and the Ashantis in the forest region north of the coast; the Guans, on the plains of the Volta River; the Ga- and Ewe-speaking peoples of the south and southeast; and the Moshi-Dagomba-speaking tribes of the northern and upper regions. English, the official and commercial language, is taught in all the schools.
Primary and junior secondary school education is tuition-free and mandatory. The Government of Ghana's support for basic education is unequivocal. Article 39 of the constitution mandates the major tenets of the free, compulsory, universal basic education (FCUBE) initiative. Launched in 1996, it is one of the most ambitious pre-tertiary education programs in West Africa. Since the early 1980s, Government of Ghana expenditures on education have risen from 1.5% to over 5% of GDP. Since 1987, the share of basic education in total education spending has averaged around 67%. The units of the Ministry of Education, Youth and Sports (MOEYS) responsible for education are: the Ghana Education Service (GES), which administers pre-university education; the National Council on Tertiary Education; the National Accreditation Board; and the National Board for Professional and Technician Examinations (NABPTEX). The West African Examinations Council (WAEC), a consortium of five Anglophone West African Countries (Ghana, Nigeria, Sierra Leone, Gambia, and Liberia) is responsible for developing, administering, and grading school-leaving examinations at the secondary level.
Since 1986, pre-tertiary education in Ghana includes six years of primary education, three years at the junior secondary school level and three years at the senior secondary school level. Successful completion of senior secondary school leads to admission eligibility at training colleges, polytechnics, and universities. In 2002 there were approximately 3.7 million students attending schools at these three levels: 70% at the primary level, 24% at the junior secondary level and 6% at the senior secondary level. There are over five hundred public senior secondary schools in Ghana that graduated a total of 90,000 students in 2004, representing a huge expansion over the old system (which was transformed in 1987), which consisted of three hundred institutions graduating 27,000 students a year. However, access to each successive level of education remains severely limited by lack of facilities. Only about 30% of junior secondary school graduates are able to gain admission to senior secondary schools, and only about 35% of senior secondary school graduates are able to gain admission to universities and polytechnics, plus another 10-20% to diploma-level postsecondary education. Private secondary schools play a very small role in Ghana, with only a handful of institutions offering international curricula such as the British-based A-levels, International Baccalaureate, and U.S. high school. Combined, they graduate fewer than 200 students a year.
Entrance to one of the five Ghanaian public universities is by examination following completion of senior secondary school. There are now five public and nine private degree-granting universities in Ghana, along with ten public polytechnics offering the British Higher National Diploma (HND), a three-year tertiary system in applied fields of study. Ghana?s first private Catholic university opened in 2003 in Sunyani. The polytechnics also offer vocational, non-tertiary diploma programs. In addition, there are approximately forty teacher-training colleges and fifteen nurses? training colleges. Private tertiary education is a recent but rapid development in Ghana, meticulously regulated by the National Accreditation Board. Over 5,000 undergraduates are now enrolled in secular degree-granting programs in nine private institutions.
In 2003-2004, new enrollments in public universities totaled 18,149; new enrollments in private universities totaled 1,380; and new enrollments in polytechnics totaled 8,688, representing an increase of 30% over theprevious five years. Total enrollment in tertiary education surpassed 100,000 for the first time in Ghana's history.
The history of the Gold Coast before the last quarter of the 15th century is derived primarily from oral tradition that refers to migrations from the ancient kingdoms of the western Soudan (the area of Mauritania and Mali). The Gold Coast was renamed Ghana upon independence in 1957 because of indications that present-day inhabitants descended from migrants who moved south from the ancient kingdom of Ghana. The first contact between Europe and the Gold Coast dates from 1470, when a party of Portuguese landed. In 1482, the Portuguese built Elmina Castle as a permanent trading base. Thomas Windham made the first recorded English trading voyage to the coast in 1553. During the next three centuries, the English, Danes, Dutch, Germans, and Portuguese controlled various parts of the coastal areas.
In 1821, the British Government took control of the British trading forts on the Gold Coast. In 1844, Fanti chiefs in the area signed an agreement with the British that became the legal steppingstone to colonial status for the coastal area.
From 1826 to 1900, the British fought a series of campaigns against the Ashantis, whose kingdom was located inland. In 1902, they succeeded in establishing firm control over the Ashanti region and making the northern territories a protectorate. British Togoland, the fourth territorial element eventually to form the nation, was part of a former German colony administered by the United Kingdom from Accra as a League of Nations mandate after 1922. In December 1946, British Togoland became a UN Trust Territory, and in 1957, following a 1956 plebiscite, the United Nations agreed that the territory would become part of Ghana when the Gold Coast achieved independence.
The four territorial divisions were administered separately until 1946, when the British Government ruled them as a single unit. In 1951, a constitution was promulgated that called for a greatly enlarged legislature composed principally of members elected by popular vote directly or indirectly. An executive council was responsible for formulating policy, with most African members drawn from the legislature and including three ex officio members appointed by the governor. A new constitution, approved on April 29, 1954, established a cabinet comprising African ministers drawn from an all-African legislature chosen by direct election. In the elections that followed, the Convention People's Party (CPP), led by Kwame Nkrumah, won the majority of seats in the new Legislative Assembly. In May 1956, Prime Minister Nkrumah's Gold Coast government issued a white paper containing proposals for Gold Coast independence. The British Government stated it would agree to a firm date for independence if a reasonable majority for such a step were obtained in the Gold Coast Legislative Assembly after a general election. This election, held in 1956, returned the CPP to power with 71 of the 104 seats in the Legislative Assembly. Ghana became an independent state on March 6, 1957, when the United Kingdom relinquished its control over the Colony of the Gold Coast and Ashanti, the Northern Territories Protectorate, and British Togoland.
In subsequent reorganizations, the country was divided into 10 regions, which currently are subdivided into 138 districts. The original Gold Coast Colony now comprises the Western, Central, Eastern, and Greater Accra Regions, with a small portion at the mouth of the Volta River assigned to the Volta Region; the Ashanti area was divided into the Ashanti and Brong-Ahafo Regions; the Northern Territories into the Northern, Upper East, and Upper West Regions; and British Togoland essentially is the same area as the Volta Region.
After independence, the CPP government under Nkrumah sought to develop Ghana as a modern, semi-industrialized, unitary socialist state. The government emphasized political and economic organization, endeavoring to increase stability and productivity through labor, youth, farmers, cooperatives, and other organizations integrated with the CPP. The government, according to Nkrumah, acted only as 'the agent of the CPP' in seeking to accomplish these goals.
The CPP's control was challenged and criticized, and Prime Minister Nkrumah used the Preventive Detention Act (1958), which provided for detention without trial for up to 5 years (later extended to 10 years). On July 1, 1960, a new constitution was adopted, changing Ghana from a parliamentary system with a prime minister to a republican form of government headed by a powerful president. In August 1960, Nkrumah was given authority to scrutinize newspapers and other publications before publication. This political evolution continued into early 1964, when a constitutional referendum changed the country to a one-party state. On February 24, 1966, the Ghanaian Army and police overthrew Nkrumah's regime. Nkrumah and all his ministers were dismissed, the CPP and National Assembly were dissolved, and the constitution was suspended. The new regime cited Nkrumah's flagrant abuse of individual rights and liberties, his regime's corrupt, oppressive, and dictatorial practices, and the rapidly deteriorating economy as the principal reasons for its action.
The leaders of the February 24, 1966 coup established the new government around the National Liberation Council (NLC) and pledged an early return to a duly constituted civilian government. Members of the judiciary and civil service remained at their posts and committees of civil servants were established to handle the administration of the country. Ghana's government returned to civilian authority under the Second Republic in October 1969 after a parliamentary election in which the Progress Party, led by Kofi A. Busia, won 105 of the 140 seats. Until mid-1970, a presidential commission led by Brigadier A.A. Afrifa held the powers of the chief of state. In a special election on August 31, 1970, former Chief Justice Edward Akufo-Addo was chosen President, and Dr. Busia became Prime Minister.
Faced with mounting economic problems, Prime Minister Busia's government undertook a drastic devaluation of the currency in December 1971. The government's inability to control the subsequent inflationary pressures stimulated further discontent, and military officers seized power in a bloodless coup on January 13, 1972.
The coup leaders, led by Col. I.K. Acheampong, formed the National Redemption Council (NRC) to which they admitted other officers, the head of the police, and one civilian. The NRC promised improvements in the quality of life for all Ghanaians and based its programs on nationalism, economic development, and self-reliance. In 1975, government reorganization resulted in the NRC's replacement by the Supreme Military Council (SMC), also headed by now-General Acheampong.
Unable to deliver on its promises, the NRC/SMC became increasingly marked by mismanagement and rampant corruption. In 1977, General Acheampong brought forward the concept of union government (UNIGOV), which would make Ghana a non-party state. Perceiving this as a ploy by Acheampong to retain power, professional groups and students launched strikes and demonstrations against the government in 1977 and 1978. The steady erosion in Acheampong's power led to his arrest in July 1978 by his chief of staff, Lt. Gen. Frederick Akuffo, who replaced him as head of state and leader of what became known as the SMC-2.
Akuffo abandoned UNIGOV and established a plan to return to constitutional and democratic government. A Constitutional Assembly was established, and political party activity was revived. Akuffo was unable to solve Ghana's economic problems, however, or to reduce the rampant corruption in which senior military officers played a major role. On June 4, 1979, his government was deposed in a violent coup by a group of junior and noncommissioned officers--Armed Forces Revolutionary Council (AFRC)--with Flt. Lt. Jerry John Rawlings as its chairman.
The AFRC executed eight senior military officers, including former chiefs of state Acheampong and Akuffo; established Special Tribunals that, secretly and without due process, tried dozens of military officers, other government officials, and private individuals for corruption, sentencing them to long prison terms and confiscating their property; and, through a combination of force and exhortation, attempted to rid Ghanaian society of corruption and profiteering. At the same time, the AFRC accepted, with a few amendments, the draft constitution that had been submitted; permitted the scheduled presidential and parliamentary elections to take place in June and July; promulgated the constitution; and handed over power to the newly elected President and Parliament of the Third Republic on September 24, 1979.
The 1979 constitution was modeled on those of Western democracies. It provided for the separation of powers between an elected president and a unicameral Parliament, an independent judiciary headed by a Supreme Court, which protected individual rights, and other autonomous institutions, such as the Electoral Commissioner and the Ombudsman. The new President, Dr. Hilla Limann, was a career diplomat from the north and the candidate of the People's National Party (PNP), the political heir of Nkrumah's CPP. Of the 140 members of Parliament, 71 were PNP. The PNP government established the constitutional institutions and generally respected democracy and individual human rights. It failed, however, to halt the continuing decline in the economy; corruption flourished, and the gap between rich and poor widened. On December 31, 1981, Flight Lt. Rawlings and a small group of enlisted and former soldiers launched a coup that succeeded against little opposition in toppling President Limann.
The PNDC Era
Rawlings and his colleagues suspended the 1979 constitution, dismissed the President and his cabinet, dissolved the Parliament, and proscribed existing political parties. They established the Provisional National Defense Council (PNDC), initially composed of seven members with Rawlings as chairman, to exercise executive and legislative powers. The existing judicial system was preserved, but alongside it the PNDC created the National Investigation Committee to root out corruption and other economic offenses; the anonymous Citizens' Vetting Committee to punish tax evasion; and the Public Tribunals to try various crimes. The PNDC proclaimed its intent to allow the people to exercise political power through defense committees to be established in communities, workplaces, and in units of the armed forces and police. Under the PNDC, Ghana remained a unitary government.
In December 1982, the PNDC announced a plan to decentralize government from Accra to the regions, the districts, and local communities, but it maintained overall control by appointing regional and district secretaries who exercised executive powers and also chaired regional and district councils. Local councils, however, were expected progressively to take over the payment of salaries, with regions and districts assuming more powers from the national government. In 1984, the PNDC created a National Appeals Tribunal to hear appeals from the public tribunals; changed the Citizens' Vetting Committee into the Office of Revenue Collection; and replaced the system of defense committees with Committees for the Defense of the Revolution.
In 1984, the PNDC also created a National Commission on Democracy to study ways to establish participatory democracy in Ghana. The commission issued a 'Blue Book' in July 1987 outlining modalities for district-level elections, which were held in late 1988 and early 1989, for newly created district assemblies. The government appointed one-third of the assembly members.
The Fourth Republic
Under international and domestic pressure for a return to democracy, the PNDC allowed the establishment of a 258-member Consultative Assembly made up of members representing geographic districts as well as established civic or business organizations. The assembly was charged to draw up a draft constitution to establish a Fourth Republic, using PNDC proposals. The PNDC accepted the final product without revision, and it was put to a national referendum on April 28, 1992, in which it received 92% approval. On May 18, 1992, the ban on party politics was lifted in preparation for multi-party elections. The PNDC and its supporters formed a new party, the National Democratic Congress (NDC), to contest the elections. Presidential elections were held on November 3 and parliamentary elections on December 29, 1992. Members of the opposition boycotted the parliamentary elections, however, which resulted in a 200-seat Parliament with only 17 opposition party members and two independents.
The constitution entered into force on January 7, 1993, to found the Fourth Republic. On that day, Flt. Lt. Jerry John Rawlings was inaugurated as President and members of Parliament swore their oaths of office. In 1996, the opposition fully contested the presidential and parliamentary elections, which were described as peaceful, free, and transparent by domestic and international observers. In that election, President Rawlings was re-elected with 57% of the popular vote. In addition, Rawlings' NDC party won 133 of the Parliament's 200 seats, just one seat short of the two-thirds majority needed to amend the constitution, although the election returns of two parliamentary seats faced legal challenges.
The December 2000 elections ushered in the first democratic presidential change of power in Ghana's history when John A. Kufuor of the New Patriotic Party (NPP) defeated the NDC's John Atta Mills--who was Rawling's Vice President and hand-picked successor. Kufuor defeated Mills by winning 56.73% of the vote, while the NPP picked up 100 of 200 seats in Parliament. The elections were declared free and fair by a large contingent of domestic and international monitors. After several by-elections were held to fill vacated seats, the NPP majority stood at 103 of the 200 seats in Parliament, while the NDC held 89 and independent and small party members held eight.
In December 2004, eight political parties contested parliamentary elections and four parties, including the NPP and NDC, contested presidential elections. This election was reported to have a remarkable turnout of 85.12% according to the Election Commission. Despite a few incidents of intimidation and minor irregularities, domestic and international observers judged the elections generally free and fair. There were several isolated incidents of election-related violence, but the election was generally peaceful in most of Ghana. John Agyekum Kufuor was re-elected president with 52.45% of the vote against three other presidential candidates, including former Vice-President John Atta Mills of the NDC. Thirty constituencies were created in the period between the 2000 and 2004 elections, resulting in a 230-member Parliament.
On March 6, 2007, Ghana celebrated its 50th anniversary since becoming independent. As the first African nation to win its struggle for independence, Ghana hosted delegations from around the world during its year-long Jubilee event.
GOVERNMENT AND POLITICAL CONDITIONS
The 1993 constitution that established the Fourth Republic provided a basic charter for the republican democratic government. It declares Ghana to be a unitary republic with sovereignty residing in the Ghanaian people. Intended to prevent future coups, dictatorial government, and one-party states, it is designed to establish the concept of power sharing. The document reflects lessons learned from the abrogated constitutions of 1957, 1960, 1969, and 1979, and incorporates provisions and institutions drawn from British and American constitutional models. One controversial provision of the constitution indemnifies members and appointees of the PNDC from liability for any official act or omission during the years of PNDC rule. The constitution calls for a system of checks and balances, with power shared between a president, a unicameral parliament, an advisory Council of State, and an independent judiciary.
Executive authority is established in the Office of the Presidency, together with his Council of State. The president is head of state, head of government, and commander in chief of the armed forces. He also appoints the vice president. According to the constitution, more than half of the presidential-appointed ministers of state must be appointed from among members of Parliament.
Legislative functions are vested in Parliament, which consists of a unicameral 230-member body plus the Speaker. To become law, legislation must have the assent of the president, who has a qualified veto over all bills except those to which a vote of urgency is attached. Members of Parliament are popularly elected by universal adult suffrage for terms of 4 years, except in wartime, when terms may be extended for not more than 12 months at a time beyond the 4 years.
The structure and the power of the judiciary are independent of the two other branches of government. The Supreme Court has broad powers of judicial review. It is authorized by the constitution to rule on the constitutionality of any legislation or executive action at the request of any aggrieved citizen. The hierarchy of courts derives largely from British juridical forms. The hierarchy, called the Superior Court of Judicature, is composed of the Supreme Court of Ghana, the Court of Appeal, the High Court of Justice, regional tribunals, and such lower courts or tribunals as Parliament may establish. The courts have jurisdiction over all civil and criminal matters.
The government of John A. Kufuor appears to enjoy broad support among the Ghanaian population as it pursues a domestic political agenda based upon public commitment to the rule of law, basic human rights, and free market initiatives. So far, the government has taken steps to strengthen freedoms of expression by repealing colonial-era criminal libel laws, dropping a number of libel suits against journalists, abolishing sometimes abusive community tribunals, and introducing legislation to establish a juvenile justice system. As part of its anti-corruption efforts the Kufuor government has pursued some high-profile cases, including the prosecution of its Minister of Youth and Sports and several former high-level government officials. On September 3, 2002, Ghana inaugurated its National Reconciliation Commission, a South Africa-style commission established to investigate human rights abuses under Ghana's former military regimes. The National Reconciliation Commission completed its hearings in July 2004 and submitted its final report with recommendations in October 2004. The government responded with a White Paper in April 2005, accepting the recommendation to establish a Reparation and Rehabilitation Fund for victims of abuse, as well as directing security forces to study carefully the various recommendations on recruitment, training and deployment.
Principal Government Officials
President--John Agyekum Kufuor
Vice President--Alhaji Mahama Aliu
Senior Minister--Joseph Henry (J.H.) Mensah
Minister of Foreign Affairs--Nana Akufo-Addo
Minister of Defense--Kwame Addo-Kufuor
Minister of Finance and Economic Planning--Kwadwo Baah-Wiredu
Minister of Trade & Industry--Alan Kyerematen
Minister of Justice and Attorney General--Joe Gartey
Minister of Interior--Kan Dapaah
Chief Justice of the Supreme Court--Justice George Acquah
Speaker of Parliament--Ebenezer Begyina Sekyi Hughes
By West African standards, Ghana has a diverse and rich resource base. The country is mainly agricultural, however, with a majority of its workers engaged in farming. Cash crops consist primarily of cocoa and cocoa products, which typically provide about two-thirds of export revenue, timber products, coconuts and other palm products, shea nuts (which produce an edible fat), and coffee. Ghana also has established a successful program of nontraditional agricultural products for export including pineapples, cashews, and pepper. Cassava, yams, plantains, corn, rice, peanuts, millet, and sorghum are the basic foodstuffs. Fish, poultry, and meat also are important dietary staples.
Minerals--principally gold, diamonds, manganese ore, and bauxite--are produced and exported. Exploration for oil and gas resources is ongoing.
Ghana's industrial base is relatively advanced compared to many other African countries. Industries include textiles, steel (using scrap), tires, oil refining, flour milling, beverages, tobacco, simple consumer goods, and car, truck, and bus assembly. Tourism has become one of Ghana's largest foreign income earners (ranking third in 2003 at $600 million), and the Ghanaian Government has placed great emphasis on further tourism support and development.
At independence, Ghana had a substantial physical and social infrastructure and $481 million in foreign reserves. The Nkrumah government further developed the infrastructure and made important public investments in the industrial sector. With assistance from the United States, the World Bank, and the United Kingdom, construction of the Akosombo Dam was completed on the Volta River in 1966. Two U.S. companies built Valco, Africa's largest aluminum smelter, to use power generated at the dam. Aluminum exports from Valco used to be a major source of foreign exchange for Ghana. The plant, which closed for production in May 2003, was sold to the Government of Ghana in October 2004, and subsequently reopened on a reduced scale in September 2005.
Many Nkrumah-era investments were monumental public works projects and poorly conceived, badly managed agricultural and industrial schemes. With cocoa prices falling and the country's foreign exchange reserves fast disappearing, the government resorted to supplier credits to finance many projects. By the mid-1960s, Ghana's reserves were gone, and the country could not meet repayment schedules. The National Liberation Council responded by abandoning unprofitable projects and selling some inefficient state-owned enterprises to private investors. On three occasions, Ghana's creditors agreed to reschedule repayments due on Nkrumah-era supplier credits. Led by the United States, foreign donors provided import loans to enable the foreign exchange-strapped government to import essential commodities.
Prime Minister Busia's government (1969-72) liberalized controls to attract foreign investment and to encourage domestic entrepreneurship. Investors were cautious, however, and cocoa prices declined again while imports surged, precipitating a serious trade deficit. Despite considerable foreign assistance and some debt relief, the Busia regime also was unable to overcome the inherited restraints on growth posed by the debt burden, balance-of-payments imbalances, foreign exchange shortages, and mismanagement.
Although foreign aid helped prevent economic collapse and was responsible for subsequent improvements in many sectors, the economy stagnated in the 10-year period preceding the NRC takeover in 1972. Population growth offset the modest increase in gross domestic product, and real earnings declined for many Ghanaians.
To restructure the economy, the NRC, under General Acheampong (1972-78), undertook an austerity program that emphasized self-reliance, particularly in food production. These plans were not realized, however, primarily because of post-1973 oil price increases and a drought in 1975-77 that particularly affected northern Ghana. The NRC, which had inherited foreign debts of almost $1 billion, abrogated existing rescheduling arrangements for some debts and rejected other repayments. After creditors objected to this unilateral action, a 1974 agreement rescheduled the medium-term debt on liberal terms. The NRC also imposed the Investment Policy Decree of 1975--effective on January 1977--that required 51% Ghanaian equity participation in most foreign firms, but the government took 40% in specified industries. Many shares were sold directly to the public.
Continued mismanagement of the economy, record inflation (more than 100% in 1977), and increasing corruption, notably at the highest political levels, led to growing dissatisfaction. The post-July 1978 military regime led by General Akuffo attempted to deal with Ghana's economic problems by making small changes in the overvalued cedi and by restraining government spending and monetary growth. Under a one-year standby agreement with the International Monetary Fund (IMF) in January 1979, the government promised to undertake economic reforms, including a reduction of the budget deficit, in return for a $68 million IMF support program and $27 million in IMF Trust Fund loans. The agreement became inoperative, however, after the June 4 coup that brought Flight Lieutenant Rawlings and the AFRC to power for 4 months.
In September 1979, the civilian government of Hilla Limann inherited declining per capita income, stagnant industrial and agricultural production due to inadequate imported supplies, shortages of imported and locally produced goods, a sizable budget deficit (almost 40% of expenditures in 1979), high inflation, 'moderating' to 54% in 1979, an increasingly overvalued cedi, flourishing smuggling and other black-market activities, high unemployment, particularly among urban youth, deterioration in the transport network, and continued foreign exchange constraints.
Limann's PNP government announced yet another (2-year) reconstruction program, emphasizing increased food production, exports, and transport improvements. Import austerity was imposed and external payments arrears cut. However, cocoa production and prices fell, while oil prices soared. No effective measures were taken to reduce rampant corruption and black marketing.
When Rawlings again seized power at the end of 1981, cocoa output had fallen to half the 1970-71 level and its world price to one-third the 1975 level. By 1982, oil would constitute half of Ghana's imports, while overall trade contracted greatly. Internal transport had slowed to a crawl, and inflation remained high. During Rawlings' first year, the economy was stagnant. Industry ran at about 10% of capacity due to the chronic shortage of foreign exchange to cover the importation of required raw materials and replacement parts. Economic conditions deteriorated further in early 1983 when Nigeria expelled an estimated 1 million Ghanaians who had to be absorbed by Ghana.
In April 1983, in coordination with the IMF, the PNDC launched an economic recovery program, perhaps the most stringent and consistent of its day in Africa, aimed at reopening infrastructure bottlenecks and reviving moribund productive sectors--agriculture, mining, and timber. The largely distorted exchange rate and prices were realigned to encourage production and exports. The government imposed fiscal and monetary discipline to curb inflation. Through November 1987, the cedi was devalued by more than 6,300%, and widespread direct price controls were substantially reduced.
The economy's response to these reforms was initially hampered by the absorption of 1 million returnees from Nigeria, compounded by the decline of foreign aid and the onset of the worst drought since independence, which brought on widespread bushfires and forced closure of the aluminum smelter and severe power cuts for industry. In 1985, the country absorbed an additional 100,000 expellees from Nigeria. In 1987, cocoa prices declined again; however, infrastructure repairs, improved weather, and producer incentives and support revived output. During 1984-88 the economy experienced solid growth for the first time since 1978. Renewed exports, aid inflows, and a foreign exchange auction eased hard currency constraints.
Since an initial August 1983 IMF standby agreement, the economic recovery program has been supported by three IMF standbys and two other credits totaling $611 million, as well as $1.1 billion from the World Bank, and hundreds of millions of dollars more from other donors. In November 1987, the IMF approved a $318-million, 3-year extended fund facility. The second phase (1987-90) of the recovery program concentrated on economic restructuring and revitalizing social services. The third phase (which began in March 1998) focused on financial transparency and macroeconomic stability.
Ghana opted to seek debt relief under the Heavily Indebted Poor Country (HIPC) program in March 2001 and reached decision point in February 2002. Ghana, the International Monetary Fund (IMF), and the World Bank Group's International Development Association (IDA) agreed in February 2002 to support a comprehensive debt reduction package for Ghana under the enhanced HIPC Initiative. Ghana reached HIPC completion point in July 2004 and total relief from all of Ghana's creditors will be approximately $3.5 billion over 20 years. The Government of Ghana, working with multilateral lending institutions, developed a detailed plan to use funds made available through debt relief under the enhanced HIPC Initiative for increased expenditures on education and health programs to improve services and infrastructure in the rural sector, and improved governance. A portion of the relief will be used to further reduce the heavy burden of domestic public debt. As part of the agreed-upon plan, Ghana in 2002 and 2003 raised electricity, fuel, and municipal water rates to market prices, and took additional revenue-enhancing measures (i.e., more taxes) to stabilize its fiscal position. Ghana again raised pump prices for gasoline, kerosene, and diesel in February 2005. A key goal for the government remains oil sector deregulation.
In August 2006, Chief Executive Officer of the Millennium Challenge Corporation (MCC) Ambassador John Danilovich and Ghanaian Minister for Public Sector Reform Papa Kwesi Nduom signed a $547 million Compact, or agreement, between MCC and the Republic of Ghana. The five-year, $547 million anti-poverty grant, the largest to date for the agency, is expected to benefit more than one million Ghanaians and aims to improve the lives of the rural poor by raising farmer incomes through private sector-led, agribusiness development.
Ghana?s stated goals are to accelerate economic growth, improve the quality of life for all Ghanaians, and reduce poverty through macroeconomic stability, higher private investment, broad-based social and rural development, as well as direct poverty-alleviation efforts. These plans are fully supported by the international donor community. Privatization of state-owned enterprises continues, with over 300 of about 350 parastatal enterprises sold to private owners. Other reforms adopted under the government's structural adjustment program include the elimination of exchange rate controls and the lifting of virtually all restrictions on imports. The establishment of an interbank foreign exchange market has greatly expanded access to foreign exchange.
The government repealed a 17% value-added tax (VAT) shortly after its introduction in 1995 because of widespread public protests. The government reverted to several previously imposed taxes, including a sales tax, and reintroduced a 10% VAT in 1998 after an extensive public education campaign. The VAT was raised to 12.5% in 2000. The government added a 2.5% National Health Insurance levy on top of the VAT in August 2004.
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