Poverty Reduction Support Credits

The Poverty Reduction Support Credit (PRSC) instrument was put to use at an opportune juncture in 2003 when, after a period of economic crisis, macroeconomic stability had been restored to Ghana and a reform process had been mapped out. The Bank used this instrument to signal strong support to the Government for the reform process, which was at risk of being derailed in the run up to the 2004 elections. The PRSC was perceived as a clear departure from previous adjustment lending, which was characterized by acrimonious negotiation of conditions. Following independence from Britain some 50 years ago, Ghana experienced rapid economic growth, spurred by commodity exports and industrialization linked to import-substitution policies. But by the early 1980s, standards of living had declined sharply, and Ghana had joined the ranks of other low-income African countries. Ghana's economic reform program, launched in 1983, marked a notable change in policy direction and a shift from a state-controlled economy to a more market-driven system. Ghana made progress in regaining macroeconomic stability and achieved its Highly Indebted Poor Country (HIPC) initiative completion point by 2004. Even so, progress was uneven, and the economy remained vulnerable. Ghana was among Africa's top 10 performers in the 2008 doing business report, and its ranking on corruption indicators is the best of low-income African countries. A recent national survey found that 75 percent of households regard corruption as a serious national problem, and 80 believe it has worsened in recent years.