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Economical

Economic History highlights

Economic and Social Development (Before 1957)

1874 - Gold Mine in Wassa and Asante.

Between 1946 -1950 gold export rose from 6 million pounds to 9 million pounds.

1898 - 1927  Railway expansion in Ghana.

1928 - Takoradi harbour.

1878 - Tetteh Quarshie brought cocoa from Fernado Po.

1885 - Cocoa first exported to Britain.

1951 - Revenue from cocoa was 60 million pounds.

Cocoa Marketing Board (CMB) was founded in 1947.

1957 - Inherited 200 million pounds from Britain.

 

1957 to 1966

 

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1966 to 1972

 

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1972 to 1979

 

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1979

 

1979 to 1982

 

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1982 to 1984

 

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1984 to 2000

 

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2001 - 2013

Following the successful completion of a two-term presidential rule — first time in post-Independence Ghana — and the peaceful hand-over of the reins of government across the political divide in 2001, the nation received what has been described as a “handsome democracy dividend”. In spite of this, or, perhaps because of it, fiscal excesses in the early years of the new Administration led to the failure and abandonment at the end of September 2002, of the three-year economic programme of 1999-2002 agreed with the International Monetary Fund (IMF) under its Poverty Reduction and Growth Facility (PRGF).  This debacle was largely on account of:

A successor programme agreed with the IMF for the period 2003 to 2005 required the removal of the petroleum price subsidies as conditionality. A policy of import parity pricing, meaning a full pass through of changes in the cedi value of world market prices of petroleum and petroleum products to domestic consumers was instituted.  A mechanism to give effect to this policy was also put in place. Consistent with the poverty reduction objective, the mechanism included cross-subsidization of products of importance in the consumption baskets of the poor — such as kerosene.

Given the high social and political costs involved, however, the policy was not consistently implemented.  Subsequent continued increases in international prices of petroleum and petroleum products were not fully passed through to domestic consumers. The Government of Ghana, apparently, could not countenance any such domestic price increases since (as was communicated to the IMF and the development partners) in its view, this could be politically “destabilizing”. In January 2005, with the 2004 elections out of the way, petroleum product prices were increased, on average, by 50 per cent.

Thereafter, the policy of full pass through of price changes in the world market, once more, was not consistently implemented resulting in significant losses and debt at Tema Oil Refinery (TOR) currently estimated at GH¢1.4 billion.

These experiences in the oil sector, concerned with subsidies, fiscal discipline and macroeconomic stability, serve to illustrate the futility and unsustainability of pursuing the strategy of macroeconomic stability with growth. They also show the possible high cost of procrastination in responding to shocks whose consequences linger on — in other words, better considered as permanent rather than temporary shocks. A good rule in economic policy management is that permanent shocks call for policy adjustment; temporary adverse shocks are best financed. Delayed responses to a persistent or permanent shock could accentuate costs which could be destabilizing.

Despite significant progress towards most of the Millennium Development Goals (MDGs), the country continues to be challenged by MDG 4, reduce child mortality; MDG 5, improve maternal health; and the sanitation component of MDG 7.