Discipline in Economic Management: The Key to Sustainable Growth and Prosperity - The Economy: 1966-1972

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Parent Category: Our Country

Category: Business & Finance

Created on Friday, 22 November 2013 00:00

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1966-1972

Mr. Chairman, on coming into office, the NLC immediately embarked on an IMF supported stabilization program aimed at improving the adverse balance of payments, cutting the budget deficit, reducing the government sector, and stimulating private enterprise. There was a reduction in absolute investment, tighter control over import licenses and a devaluation of the cedi. The objective of the stabilization was largely achieved. The balance of trade moved into surplus and the current account and the government budget deficits were reduced. Inflation fell from an average of 18.0 percent between 1964-66 to a single digit average of 9.0 percent between 1967-69.

The NLC announced a transition to civilian rule with general elections to be held in 1969. The Progress Party won the 1969 elections under the leadership of Dr. K.A. Busia and inherited an economy struggling to recover from the fiscal excesses and debts of the Nkrumah era. Busia’s vision and philosophy was very different from that of Nkrumah. Dr. Busia’s vision was founded on the principles of free governments, representative governments, multiparty democracy, free press, the rule of law and principles of democratic accountability.

The Busia Government made significant strides with its rural development agenda in a short period of time but by 1971, the economic situation was aggravated by a dramatic drop in cocoa prices resulting in a balance of trade deficit. The government responded with a devaluation of the cedi by 42.0 percent in December 1971 and cuts in government expenditure. The attempt to impose fiscal discipline was not allowed by the military to work. The devaluation and economic difficulties provided the pretext for a coup d’etat on 13th January 1972 by the National Redemption Council in 1972 under Colonel I.K. Acheampong.