Changes

Although foreign aid helped prevent economic collapse and was responsible for subsequent improvements in many sectors, the economy stagnated in the 10-year period preceding the NRC takeover in 1972. Population growth offset the modest increase in gross domestic product, and real earnings declined for many Ghanaians.  

Although foreign aid helped prevent economic collapse and was responsible for subsequent improvements in many sectors, the economy stagnated in the 10-year period preceding the NRC takeover in 1972. Population growth offset the modest increase in gross domestic product, and real earnings declined for many Ghanaians.  

To restructure the economy, the NRC, under General Acheampong (1972–78), undertook an austerity program that emphasized self-reliance, particularly in food production. These plans were not realized, however, primarily because of post-1973 oil price increases and a drought in 1975-77 that particularly affected northern Ghana. The NRC, which had inherited foreign debts of almost $1 billion, abrogated existing rescheduling arrangements for some debts and rejected other repayments. After creditors objected to this unilateral action, a 1974 agreement rescheduled the medium-term debt on liberal terms. The NRC also imposed the Investment Policy Decree of 1975—effective on January 1977—that required 51% Ghanaian equity participation in most foreign firms, but the government took 40% in specified industries. Many shares were sold directly to the public.  

To restructure the economy, the NRC, under General Acheampong (1972–78), undertook an [[Ascesis|austerity]] program that emphasized self-reliance, particularly in food production. These plans were not realized, however, primarily because of post-1973 oil price increases and a drought in 1975-77 that particularly affected northern Ghana. The NRC, which had inherited foreign debts of almost $1 billion, abrogated existing rescheduling arrangements for some debts and rejected other repayments. After creditors objected to this unilateral action, a 1974 agreement rescheduled the medium-term debt on liberal terms. The NRC also imposed the Investment Policy Decree of 1975—effective on January 1977—that required 51% Ghanaian equity participation in most foreign firms, but the government took 40% in specified industries. Many shares were sold directly to the public.  

Continued mismanagement of the economy, record inflation (more than 100% in 1977), and increasing corruption, notably at the highest political levels, led to growing dissatisfaction. The post-July 1978 military regime led by General Akuffo attempted to deal with Ghana's economic problems by making small changes in the overvalued cedi and by restraining government spending and monetary growth. Under a one-year standby agreement with the International Monetary Fund (IMF) in January 1979, the government promised to undertake economic reforms, including a reduction of the budget deficit, in return for a $68 million IMF support program and $27 million in IMF Trust Fund loans. The agreement became inoperative, however, after the June 4 coup that brought Flight Lieutenant Rawlings and the AFRC to power for 4 months.  

Continued mismanagement of the economy, record inflation (more than 100% in 1977), and increasing corruption, notably at the highest political levels, led to growing dissatisfaction. The post-July 1978 military regime led by General Akuffo attempted to deal with Ghana's economic problems by making small changes in the overvalued cedi and by restraining government spending and monetary growth. Under a one-year standby agreement with the International Monetary Fund (IMF) in January 1979, the government promised to undertake economic reforms, including a reduction of the budget deficit, in return for a $68 million IMF support program and $27 million in IMF Trust Fund loans. The agreement became inoperative, however, after the June 4 coup that brought Flight Lieutenant Rawlings and the AFRC to power for 4 months.