4 NOVEMBER 1999

As Jerry Rawlings prepares to step down, the country has to maintain democracy and consolidate recovery, says Michael Holman

The country that blazed the trail of African economic reform is once again moving into uncharted territory. In just over a year, Ghana will hold presidential and parliamentary elections that will mark the end of an era.

Jerry Rawlings, the former flight lieutenant who has dominated Ghana's politics and presided over its economic revival, is constitutionally obliged to step down by the end of 2000 after 21 years in charge.

Ghana is set to become the first African state in which an ex-military leader who became a freely elected head of government ends his term in office and leaves the choice of his successor to a multi-party election.

Putting this into practice will test the resilience of the political system. Will Mr Rawlings, who at 52 is still comparatively young, leave the political arena? Or will he remain the de facto leader should his National Democratic Congress (NDC) party be returned to power - and the focus of opposition, if it is not?

Will his party, already weakened by defections, retain cohesion under Mr Rawlings' probable successor, John Atta Mills, currently vice-president? Or might Mr Rawlings' wife, Nana Konadu Agyeman, make a late bid for office?

And perhaps most crucial of all, can the government keep taking the International Monetary Fund and World Bank medicine in the run-up to the elections while following through with further reforms? Or will the ruling party succumb to the temptation to spend its way back into power as it has done in the past?

In 1986, Ghana under Mr Rawlings started the structural adjustment programme that turned a state-controlled economy into one that became increasingly market-driven and private-sector led.

Crippled by the mismanagement of the autocratic Kwame Nkrumah, independent Ghana's first leader, and of the corrupt and incompetent military regimes that followed, Ghana staged a remarkable recovery - although falling short of some of the more optimistic expectations.

Average gross domestic product growth has reached 4.2 per cent over the past decade - an impressive performance, though well short of the minimum 8 per cent target it has set in an effort to reach middle-income country status by 2020.

Nevertheless, it is a record that won the past two elections for the NDC. This time round, however, there is a new dimension to the contest, with the main opposition New Patriotic party (NPP), led by John Kufuor, likely to pose the NDC's toughest challenge yet.

Some Ghanaians argue that when Mr Rawlings is no longer protected by office, he and others should answer questions about Ghana's bloody past.

June 4 this year marked the 20th anniversary of the coup d'?tat that first brought Mr Rawlings, then a 32-year-old air force pilot, to power. It brought back painful memories.

Three former heads of state were executed, as were several senior army officers, but what is also vividly remembered is the murder of three high court judges in 1983. Although a government inquiry placed the blame on a junior army officer, many Ghanaians believe that the real culprits are still at large, and some have called for a South African-style Truth and Reconciliation Commission.

Others argue, however, that digging up the past would be dangerous and divisive. Far better, they say, to concentrate on the weaknesses in the implementation of an economic policy whose principles they support.

Yaw Ofafa-Maafo, [Osafo-Maafo]the opposition NPP spokesman on trade and industry, calls for greater transparency, closer scrutiny of government spending, more independence for the central bank, and points to continuing delays in the privatisation programme.

But it is the impact of external events over which the country has no control that is currently determining the country's economic prospects.

The price of cocoa, Ghana's second largest foreign exchange earner, fell to a five-year low in May; the price of oil has more than doubled since February; and the price of gold, the country's largest export earner, hit a 20-year low in July this year.

And when gold stunned the market and climbed by a third in a few days, it left Ashanti Goldfields, the country's biggest gold producer - in which the government has a 20 per cent stake and a "golden" share - heavily exposed in its hedging operations, and vulnerable to a takeover.

Despite the recovery in gold prices, the government has revised its GDP growth forecasts from 5.5 per cent to no more than 4 per cent, and hasacknowledged that it cannot meet the target of single-digit inflation for the year.

Difficult times are ahead and opposition MPs fear the government will succumb to the temptation to relax its spending controls as the election draws nearer.

This may not be as easy to get away with as in the past, thanks to a monitoring system introduced by the government itself.

Initiated in 1996, the public financial management reform programme - Pufmarp - is now in effect and will allow tighter control of accounts. For the first time, all government resources, including external financing, have been accounted for in the budget preparation guidelines.

With the reassurance that this system provides, coupled with the need for an African success story, the IMF, World Bank and other donors have been prepared to maintain their high level of support for the Ghanaian government.

External financing requirements were originally expected to total around $2.5bn between 1999 and 2001. But the combination of external problems and a drop in aid from Japan - awaiting the outcome of debt relief negotiations for the world's poorest countries before committing itself to further assistance - has left the government with a significant shortfall.

Ghana is putting its case to donors later this month at a World Bank-chaired consultative group meeting in Accra. "We need for them to understand the difficulties that we are going through and for them to be prepared to make substantial contributions to our effort," says Victor Selormey, deputy finance minister.

The appeal will be backed by an impressive agenda intended to improve the business and investment climate, as well as giving greater priority to poverty alleviation measures.

It ranges from a private sector-led improvement of port facilities, as part of an attempt to make Ghana the gateway to West Africa, to toll roads, free trade zones, privatising water supplies and reviewing a land tenure policy which fails to provide security of title.

But signs of strain are already emerging. Civil servants and trade unionists are pursuing wage claims, and students are campaigning against an increase in fees. Job losses are starting to hit the mining sector and the government will be hard pressed to continue its price support for the country's cocoa farmers.

And as elections draw closer, Ghanaians will be asking themselves which party can best sustain reform, maintain democracy and deliver this agenda in the post-Rawlings era.