The current constitution, which forms the basis of the Fourth Republic, has been in force since 1992. Executive power lies with the President, who is directly elected for a four-year term. The president can be re-elected once. The President is also the supreme commander of military units. The Vice-President is appointed by the President and the Council of Ministers.
The legislature consists of a 230-member parliament elected directly for a four-year term. The Constitution provides for a State Council, consisting of 25 regional representatives and members appointed by the President, and a National Security Council of 20 members, which is chaired by the Vice-President. Both bodies have an advisory function to the President.
The Constitution stipulates that a President may only serve two terms. Rawlings was therefore not allowed to stand for a third term before the December 2000 elections. In the run-up to the elections, provenance played an important role in the choice of a running mate. Whereas the presidential candidates of the NDC and the NPP came from the predominantly Christian south of Ghana, their candidates for the vice-presidency came from the predominantly Muslim north of Ghana.
After the victory of Kufuor's opposition party, former President Rawlings transferred power without any problems. The current domestic political situation is quite stable; maintaining this political stability will depend on how President Kufuor is able to deliver 'positive change' (his main election promise) to the average Ghanaian citizen. Much will also depend on the course the current opposition party (NDC) will take and how former NDC leader Rawlings will be dealt with.
On 28 March 2002, the Yaa-Naa, Paramount Chief of one of the Dagomba tribes in Northern Ghana, and 27 of his followers, were murdered. The murder took place in the town of Yendi, in north-east Ghana. This was followed by a period of unrest in Yendi and the surrounding area. Immediately after the murder, a state of emergency was imposed in the Dagbon area and since then the north has been relatively calm. The government currently seems to have the situation reasonably under control. The conflict between the two clans of the Dagomba tribe (the Andani and the Abudu) dates back to the Nkrumah period (1960s). This dispute is also intertwined with party politics and it has taken about four years to resolve the dispute over burial procedures. Last April, the Yaa-Naa was buried and a regent from the Andani clan was appointed to take over temporarily. The crisis has thus been resolved for the time being, but is certainly not over yet.
The current political situation is described in the history section.
The Ghanaian economy relies mainly on agriculture: agriculture contributes just under 20% to GDP (2017). Gold, cocoa and wood are the most important export products. The Ghanaian economy is extremely sensitive to drought, pests and international price fluctuations. For example, in the 1960s, Ghana was the world's largest cocoa producer. However, Ivory Coast took over the leading position after cocoa cultivation was plagued by plant diseases and inefficiency. Ghana's two major ports, Takoradi in the west and Tema near Accra, still rely heavily on cocoa transhipment.
Ghana also suffers from energy shortages, which led to an acute crisis in 1998, rationing both industries and households. In 1999 and 2000, sharply declining world market prices for cocoa and gold led to disappointing government revenues. In addition, the increased prices of oil imports led to a sharp increase in government expenditure. This combination of factors led to a sharp deterioration in the balance of payments in 2000 and 2001. In recent years, Ghana has again benefited from the increase in cocoa prices.
Ghana has a long history of structural adjustment. At the time of independence, the economic prospects for Ghana were favourable; the country had a relatively high standard of living. The Nkrumah government pursued rapid industrialisation financed by the state with export earnings. However, inadequate planning and a drop in the world market price for cocoa threw a spanner in the works. The result was a growing budget deficit. Deficits were absorbed by the country's own banking system, which led to an overvalued cedi, shortages of foreign exchange, high inflation and, consequently, reduced production. Not only did this have devastating consequences for the export sector (at the beginning of the 1970s Ghana still had one third of the world market for cocoa, in 1990 this share had dropped to 13%), but the supply of domestic markets also came under heavy pressure. In the course of the 1970s, for example, food imports had to quadruple.
Economic mismanagement continued until the mid-1980s. In order to break the downward spiral, the Rawlings government, in consultation with the World Bank and the IMF, launched the Economic Recovery Programme (ERP) in 1983, which began by stimulating direct productive activities and the export sector, liberalising the exchange rate, restoring monetary and fiscal discipline and encouraging private savings and investment. The initial tentative successes of this programme were further deepened and consolidated from 1986 onwards by two phases of a structural adjustment programme (SAP) and adjustment programmes in the financial, private and agricultural sectors, all in collaboration with the World Bank and IMF.
Ghana has, with the exception of a few setbacks, established a good track record in implementing these adjustment programmes and has generally adhered reasonably well to set targets and time limits. Achievements include the complete liberalisation of trade and exchange, reforms in the fiscal, monetary, financial and public sectors, and privatisation of state enterprises. As a result, during the period 1986-1993 GNP averaged a real growth rate of 4.7% per year and inflation declined from 122% in 1983 to 40% in 1987 and 10% in 1992.
In the run-up to democratic elections (in 1992 and 1996), the reform process slowed down. Government expenditure (especially public sector wages) increased significantly. The resulting budget deficits were financed monetarily, resulting in increasing inflation to over 60%.
1997 was a turning point: the Ghanaian government again took up the reform programme with vigour. 1998 showed positive results, despite the energy crisis that plagued the country. Several structural reforms were carried out during this year: a sharp increase in electricity and water tariffs, the introduction of VAT (at 10%), the adoption of a Medium-Term Expenditure Framework (MTEF) and the sale of the Ghana Oil Company. The strategy for 1999 and 2000 then aimed at consolidating the macroeconomic stability achieved in 1998 while continuing structural reforms (aimed at real growth and poverty reduction). Priority was given to liberalisation of the cocoa and energy sectors, accelerated privatisation of state-owned enterprises, strengthening of the banking system, implementation of public sector reforms and further trade liberalisation. Things did not go well for Ghana in 1999, however: the country underwent a trade balance crisis due to the sharp fall in world market prices for cocoa and gold and the rise in oil prices. As a result, the government lost important export revenues and spent more money on imports.
Although Ghana made progress in its macro-economic reform programme in 2001, the poor economic situation continued until the end of 2001. Upon taking office in 2001, the Kufuor government was forced to take a number of unpopular measures to implement long-delayed, but necessary, price increases. For example, fuel and water prices were raised sharply in 2001 (+60%). Also, in February 2003, the Kufuor government adjusted fuel prices again, causing petrol prices to increase by 90% that month.
Both the World Bank and the IMF are supporting the Government of Ghana in its efforts to take the necessary fiscal, monetary and structural measures to keep Ghana's adjustment programme on track.
Ghana's heavy debt burden is a critical factor for economic growth and poverty reduction. Total external debt in 2002 was US$ 7.2 billion. Ghana decided to join the Heavily Indebted Poor Countries (HIPC) initiative early in 2001. This initiative focuses on the cancellation of foreign debt.
In early 2003, the final PRSP (Poverty Reduction Strategy Paper), the government's national poverty reduction plan, was finalised. In Ghana, this plan is called the Ghana Poverty Reduction Strategy (GPRS) and sets out the priorities of the Ghanaian government in its fight against poverty in the country. This plan also serves as a guide for the development programmes of the donor countries, the World Bank and the IMF. At the end of April 2003, the document was presented to the Executive Directors of the World Bank and the IMF, who played an advisory role. With this, an important step was taken towards further debt relief of the HIPC initiative. Meanwhile, the follow-up, the GPRS II, covering the years 2006-2009, was published in November 2005.
In the last decade, Ghana has been doing quite well with robust growth rates. In 2011, there was a record 15% growth, followed by 7.9% growth in 2012 and 2013. In 2017, the growth rate was 8.4% GDP per capita was $4,700 in 2017.
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