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Riding on a very good note from a World Bank report in July 1st 2011 that Ghana had reached middle-income status, the government and the people of Ghana are hoping to see and work to maintain this level. With this in mind, the government in its 2012 budget has laid emphasis on infrastructural development that will propel the nation for accelerated growth, create jobs and ultimately, develop the nation at large. With a GDP growth of 13.6% in 2011 from 7.7% in 2010 and a significant reduction of fiscal deficit from 6.6% of the GDP in 2008 on cash basis (14.5% of GDP old series) to 2.0% of GDP as at September 2011, coupled with a low interest rate of 9% and a year-end inflation of 8.58% in 2011, expectations are very high that almost all the targets set in the 2012 budget statement will have to be met. This stems from the fact that a major macroeconomic target for 2012 at 9.45% growth of real overall GDP -- with an overall budget deficit of 4.8% of GDP and an estimated end of year inflation of 8.50% as well should see Ghana as an emerging African economic tiger that can be compared to that of the Asians. CURRENT ECONOMIC CHALLENGES There however seems to be some challenges to our growth, right in the first quarter of 2012. This has made our monetary policy authorities adopt some of the orthodox economic tools in correcting the situation as always done here and elsewhere, though we have always not achieved the desired results. What is first causing shocks to the economy is the depreciation of our cedi against most of its trading partners. It is reported that our cedi has depreciated at the much faster rate of 5.9% compared to 1.9% in January 2011. This is attributed to our strong demand and appetite for foreign goods and services, and hence a strong demand for exchange -- especially the American dollar, British pound and the euro to import. This is coupled with speculation in the market on the part of businessmen and women. It is on this note that the Governor of the Bank Of Ghana, Mr. Amissah-Arthur, has thus given a gloomy picture of the country�s economy on its dependency on imports during the Monetary Policy Committee press briefing in Accra in February 2012. Such is the worry that the BoG has pumped US$450m into the economy to save the situation. A second disturbing but contentious factor of the economy�s problem is the upward adjustment of the policy rate to 13.5% from 12.5%. This is the first increase in three months. This policy rate is the rate at which the BoG lends cash and cash-equivalents to financial institutions especially the commercial banks, who in turn based on the policy rate fix their commercial rate to lend and advance loans to businesses and individuals. Even though this is used to control the amount of cash-flow in the economy, the higher the rate, the less liquid the economy will be and vice versa. The net effect is to curtail demand for goods and services more than supply, and eventually halt the rising level of the country�s inflation of 8.7% in January from 8.52% in December last year. This policy motive will in the long-run increase the costs of borrowing by businesses, and eventually reflect in the prices of goods and services. Already, the AGI in its recent barometer report indicated that access to credit and high cost of credits are the two key challenges facing the manufacturing sector of the economy. In the same vein SMEs rank access to credit as the number-one challenge, with high cost of raw materials closely behind. However, some commercial banks like Barclays Bank of Ghana and The Agriculture Development Bank have maintained that they will not automatically adjust their lending rates to this new figure, but will monitor the situation and look at other variables before taking a final decision on the matter. Another challenge to the economy is the fear of government overspending in the economy due to the rising level of the public debt figure. It is known that the public debt per the BoG recent report in February 2012 now stands at GH�23.6bn as at the end of 2011, equivalent to 44.2% of GDP compared to GH�17.6bn (38.1% of GDP in 2010). In fact, there is the pressure on government to meet the needs of the people of Ghana in terms of roads, energy, water supply projects, electricity and the increasing wage demands of the Single Spine Salary Structure. But it is envisaged that too much government spending would throw more money into the economy and into people�s hands to chase more goods and services than supplied, thus causing inflation (demand-pull). This is even feared the more as we find ourselves in an election year and with the discovery of oil. Various constituencies are likely to step-up demands for their share of the national cake from the government before they cast their votes. Last but not the least, an anticipated external shock to the economy is likely to come from the unfavourable developments in the Euro Zone. This might have the potential to reduce trade finance to domestic banks, diminish portfolio inflows, and worsen terms of trade due to reduced demand for our exports which are mostly primary in nature. But in all these, solving current challenges of the economy has been done by the use of time-tested tools which have been propounded by various contemporary economists. These are underpinned on the premise of �all things being equal�, or �all other things remaining constant� and by letting the �forces of demand and supply� in the market correct these problems themselves. In reality, some of these measures do not materialise and we mostly find ourselves back to square-one under the vicious cycle of under-development. OTHER OPTIONS THAN KNOWN APPLICATIONS Concerning the depreciation of our cedi, what has been done is to release more dollars to be able to cushion the falling value and hence have the tendency to compete well and avert inflation. But this move would have the effect of making more of the foreign currency still available to importers, who would continue to go in for foreign products (imports) to satisfy demands. This will result into the old cycle -- thus affecting the cedi�s value, create trade deficits, and invariably cause inflation to rise in the economy. However, to counter this, the following options can be adopted. First, the monetary authorities must place a ceiling on the amount of foreign exchange an importer can have to import; and also make it highly unprofitable for people to redeem their foreign investments before they mature. Simultaneously, the Authorities that be should make it more profitable for exports as compared to imports without necessarily placing quotas and tariffs on imports since we now operate in an open economy and cannot survive any retaliation that affects our exports. When these measures have been adopted by the Central Bank and the Trade Ministry (Government), they will compel our importers to look locally into the economy for supplies in addition to the imports they bring in. This then would encourage the direct foreign investors and local manufacturers/suppliers to provide more international quality and standard goods and services for the importers, who would then have local means to meet the demands of their customers. With this achieved, it would in the long-run help more to be produced locally than imported for consumption; stabilise our cedi; maintain a controlled inflationary trend; and further boost investments and development in the country. With regard to the points whereby -- due to cutting government expenditure, reducing credit to businesses and reducing inflation -- the Central Bank has increased the policy ratio to a 100%, these would all cause increase in the cost of borrowing by the banks: who would also pass on that high cost to businesses and individuals. Most businesses having had their loans at a higher cost would push it onto the prices of their goods for their customers to bear the increase. Manufacturers would find it difficult borrowing at that higher cost, and this would affect cost of production and hence supplies to meet demand. When all these have aggregated, inflation would still stir in our economy and further aggravate the old problems for which the orthodox method had been applied to solve. However as an alternative to this, it is suggested that the interest rate in the country be fixed at statutory levels rather than controlled as and when to solve this inflationary trend. This is because when the policy rate is fixed for a longer time but could easily be changed after a while, no matter the level of inflation, due to spending by government and businesses, comparative growth and development would be achieved more than otherwise observed. With businesses borrowing at a fixed-rate despite the country�s inflation, manufacturers in this case can borrow at a comparatively flexible rate; and this can afford them to produce and expand production to meet demands, create jobs to ease unemployment, and thereby generate tax revenues for government to provide for the needs of its citizens. In the same vein, if government spends and invests in productive ventures to provide the needed infrastructure, create jobs and develop the various economic sectors of the economy, the country would be placed on the pedestal that translates into a better Ghana and a higher standard of living for the people. Thus it is good to check inflation, but there are the other good sides of it and bold decisions must be taken to solve our developmental problems. Last but not the least, due to the Euro Zone problem, and fearing for the worse, our monetary policy has changed temporarily. But this can be done in such a way that despite whatever may occur elsewhere, our economy can still somewhat withstand external shocks. In Dr.Kwame Nkrumah�s seven-year development plan (1963/64-1966/70), from which we still benefit even till this day, a number of economic mishaps happened elsewhere but were never felt much by our economy. Why can�t Ghana adopt a National Development Policy, in that no matter whichever government is in power and under whatever mandate-term given, it will follow to the letter the programmes laid-out rather than abandoning projects and development because they were not be a part of a particular government�s manifesto. Such projects, having been embarked upon, would be beneficial to the nation as a whole. When we have these in place, no matter the external shocks, we will still reach our goals in the long-run rather than applying these wait-and-see methods that do not help us at times. The impositions of ad hoc measures that we strictly opt from the economics books do not really help our cause as a nation most times. Other options are available, as pinpointed above, and these must be strategically applied to help us reach our economic independence. Indeed, it needs to be pointed out that because we have allowed our multilateral partners -- the IMF, World Bank and other donor agencies and countries -- to always determine our economic fates, we find it difficult to independently adopt measures that would suit us and usher us into economic growth and development. Let us for once make a strong case against these orthodox tools and champion our own course to economic prosperity. We live in the midst of plenty and cannot wait forever. We should remember that posterity will one day judge us.