Financial and Foreign Exchange Markets Liberalization in Ghana
This paper examines whether Ghana, with its imperfect markets and institutional difficulties, has benefited from recent liberalization efforts under SAP. Although the liberalization improved the allocative efficiency of the services provided on the financial and foreign exchange markets, the macro benefits appear very minimal. Inflationary trends in the country continue to be influenced principally by changes in output and money with very minor impacts by both interest rate and exchange rate developments. With exports dominated by only one major primary commodity whose producer price is influenced more by political considerations than exchange rate developments, liberalization of the foreign exchange market does not seem to have impacted favourably on exports. On the other hand, the import-dependent economy of Ghana has not been discouraged by rapid depreciation under the liberalization programme.