3 ECONOMIC GOVERNANCE AND MANAGEMENT “… to promote market efficiency, to control wasteful spending, to consolidate democracy, and to encourage private financial flows all of which are official aspects of the quest to reduce poverty and enhance sustainable development.” Declaration on Democracy, Political, Economic and Corporate Governance, paragraph 18 3.1 Overview 1. On attaining political independence in 1958, Ghana's economic policies were geared towards the development of infrastructure and the provision of social services. The most successful venture during this period was the Volta River Project, with its hydro-electric power scheme and the new town of Temba. 2. From 1966 onwards, various ambitious plans for restructuring the economy and developing local manufacturing capacity met with little success. Ghana's economy, including the country's balance of payments, remained anchored to only a few products (cocoa, gold and timber). These were mainly exported to earn foreign exchange to be used for importing basic essential consumer goods. These efforts to restructure the economy were, however, hampered by political instability, excessive government intervention in the economy, balance of payments constraints and an untenable foreign debt position. 3. A period of serious economic decline followed throughout the 1970s and early 1980s. Ghana initiated a comprehensive Economic Recovery Programme (ERP) in 1983. This programme embraced macroeconomic, structural (including public sector) reform, and was supported by resources from the International Monetary Fund (IMF), the World Bank, the African Development Bank (AfDB) and other donors. Macroeconomic and structural policies under the ERP included: ? Strengthening of the foreign exchange system and external trade liberalisation; ? Various initiatives to diversify exports; ? Privatisation of some state enterprises and improvement in the management of others; ? Concerted fiscal reforms to control the Wage Bill, improve the management of other public sector expenditures, reform the tax system and improve tax administration, with a view to reducing budget deficits as a proportion of gross 47