The Institutional and Political Framework of Macro-Economic Management in Ghana

This Paper surveys the institutional and political factors that were responsible for the programme’s success and raises questions about its long-term sustainability. It challenges a widely held view in the recent literature that successful adjustment requires institutionalization, accountability and participation. In Ghana, adjustment was underpinned by very unorthodox institutional arrangements and politics. Highly centralized and personalistic structures were crafted by the political leadership to support the programme; well-motivated and capable technocratic managers enjoyed significant autonomy in defining and implementing their work; and the international financial institutions provided technical support without facing serious resistance from bureaucrats and vested interests — as would have been the case in more settled institutional settings. In short, economic restructuring was carried out in a context of de-institutionalization.

The structural adjustment team was drawn from three disparate groups: professional economists and planners in the civil service; political appointees, with varied professional backgrounds, who supervised the work of the civil servants, and took the crucial technical decisions for approval by
the political leadership; and the adjustment management group, which was responsible for the political direction of the programme. Despite the heterogeneous character of the team (consisting of Marxists, liberal academics, politicians and bureaucrats), the key actors were able to produce
coherent working agendas that were based on pragmatism, personal trust, and respect for the rules as defined by a charismatic and forceful political leader, Jerry Rawlings.

However, de-institutionalization had its costs: the private sector, like other organized interests, was never a partner in adjustment, and thus failed to respond positively to the reforms; and the democratization of the 1990s exposed the deep-seated divisions that had built up over the direction of the adjustment programme and forced a continuation of the personalistic style of presidential rule.

The paper contends that the most noticeable effect of adjustment has been the restoration of the fiscal health of the state rather than the transformation of the real economy. And even this has proved
fragile. The régime has been forced to dispense patronage in order to ward off increasing protests from organized interests as well as to retain political support. The effect has been a slackening of the reforms, with high fiscal deficits and substantial government borrowing from the central bank becoming major problems in the 1990s.