Ghana - Domestic policy
Kufuor was elected on a platform promising a "Golden Age of Business" and "Zero Tolerance for Corruption," but these slogans represent mostly unfinished business for his government. On the positive side, Kufuor's administration has kept inflation down, exercised fiscal discipline, and established macroeconomic stability. One of the reasons behind this new discipline was legislation that gave the Bank of Ghana a measure of independence to make monetary policy in the best interests of the state. Kufuor also has been commended for consulting the private sector and civil society in economic policy review and analysis.
Analysts have found the administration under Kufuor's leadership to be guilty of sins of omission, perhaps owing to lack of decisiveness and action. Among these sins is the absence of a framework to implement wealth-building policies despite the creation of a new ministry for Private Sector Development. The economy remains fundamentally unchanged in its dependency on imports and orientation toward services and retail business. Further, the government's budget allocations have failed to reflect the objectives framed in the Poverty Reduction Strategy Paper (PRSP), something which the administration has promised to remedy. In addition, little action on the part of the administration would indicate that the government is serious about advancing decentralization.
A number of microeconomic challenges were pending as well. These include resolving the debt crisis of the Tema Oil Refinery (TOR), finding a sustainable solution to extremely low ("sub-living") wage levels in the public sector, reassessing the value of government-controlled natural resources such as timber and land, adopting market solutions to smuggling of cocoa and fuel, and mobilizing local revenues. Studies show that tax evasion is rampant among corporations, entrepreneurs, and professionals.
While Kufuor's government has stabilized the economy, long-term challenges remain. The economy needs to grow by at least 6% per year to reduce poverty—4.8% is realistic— and the government must hope to avoid the shocks that result from potentially unfavorable terms of trade. The economy is especially vulnerable to the prices of imported fuel, and is heavily invested in export commodities such as cocoa and gold. To increase savings and to spur private sector investment, inflation must be controlled.