Introduction

Over the decade of the 1990s Ghana was considered an example among African countries regarding the pace and extent of the economic reforms affecting its trade regime, its financial sector, and the conduct of its fiscal and monetary policy (Kapur et al., 1991). This reputation was earned in the latter half of the 1980s when the government instituted a series of policy measures to rescue the economy from the depths of its most severe crisis in the post-colonial period. The Economic Recovery Programme (ERP) placed Ghana on a path of modest economic growth: from a per capita GDP of $309 in 1983,1 per capita income grew at an average rate of 1.8% per year to $371 in 1993. Despite this early promise, Ghana's economic growth has continued to be moderate; per capita incomes grew at only 1.5% per year from 1993 through 2000 to reach $411. At this rate, per capita income will double in 50 years. This is a far cry from the ambitious growth rates envisioned in official growth plans such as Vision 2020, which was predicated on per capita growth rates of 5-7% per annum. Yet, it was perplexing to most observers that in March 2001 the recently elected government of the New Patriotic Party (NPP) sought relief under the Highly Indebted Poor Countries (HIPC) initiative, as it dealt with the aftermath of a severe currency crisis.