Control of money-supply growth and liquidity management have been among the ERP's most difficult tasks, and expansion has generally exceeded targets for most of the 1980s. The initial phase of monetary policy (1983-86) focused on reducing government borrowing from the domestic banking system and on using quantitative controls via credit ceilings. Although these succeeded in reducing domestic credit growth, larger than expected foreign earnings and the money market's inability to process them efficiently contributed to a rapid expansion in the broad money supply until the late 1980s.

The subsequent introduction of more dynamic monetary policies in 1989 involved a phase-in of indirect controls and market-based policy instruments. A further series of measures was introduced in 1990 to strengthen the responsiveness of interest rates to changes in liquidity conditions. There followed a phased increase in the Bank of Ghana's rediscount rate from 26 percent to 35 percent by mid-1991, the introduction of three- and five-year instruments later that year, and a widening of access to Bank of Ghana financial instruments in favor of the non-bank financial sector. The policies were quite effective. Money supply growth was brought convincingly under control in 1990 and 1991 however, a decline in interest rates and in monetary control, compounded by salary increases in the public sector, prompted monetary growth in 1992.

In January 1994, the Bank of Ghana relaxed its monetary policy. As a result, the government's 91-day treasury bill discount rate was lowered five percentage points to 27 percent. The interest rate equivalent of the discount rate fell from 34.78 percent to 28.95 percent. Savings deposit rates also fell in December 1993 from 17.5-22 percent to 15-22 percent. The wider range suggests competition for funds in the banking market. The range for longerterm money (two-year) declined from 22-32 percent to 25.2-28 percent.

Data as of November 1994