The economy is coming out of a very turbulent two-year period but today, the domestic economic situation is decidedly different. The economic aggregates and indicators are pointing in the right directions. Inflation is coming down, interest rates are easing downward, exchange market volatility has diminished.
Macroeconomic policies have shifted from one of considerable fiscal relaxation and monetary accommodation to one of fiscal stringency and monetary restraint. The rigorous implementation of the fiscal framework along with the price adjustments to utilities, petroleum and other services introduced in the interim budget explains the observed stability in the foreign exchange market.
The first tangible benefit of HIPC is already being felt in an improved cash flow position. The greatest benefit is yet to come in the form of a deep reduction in the stock of debt from its presently unsustainable levels, releasing funds for social sector spending programs.
Well endowed with natural resources, Ghana has twice the per capita output of the poorer countries in West Africa. Even so, Ghana remains heavily dependent on international financial and technical assistance. Gold, timber, and cocoa production are major sources of foreign exchange.
The domestic economy continues to revolve around subsistence agriculture, which accounts for 41% of GDP and employs 60% of the work force, mainly small landholders.