This Chapter discusses Ghana'sefforts in 2009 and 2010 to restore macro-economic stabilitythrough fiscal consolidation. It underlines that asubstantial fiscal adjustment was undertaken, and yieldedimportant results in terms of foreign currency reservesposition, consumer prices and exchange rate stability. Theadjustment mostly took the form of expenditure containment,and had initially a significant impact on overall economicactivity through its negative impact on aggregate demand.This effect was compounded by the absence of relay from theprivate sector, which found it difficult to access creditfrom a domestic financial sector crippled with nonperforming loans, the latter originating for a large extentfrom the continued accumulation of public expenditurearrears. Meanwhile, Ghana improved domestic resourcemobilization, though from a low base. This joint review ofpublic expenditure and financial management is an attempt tofill this gap and re-focus attention on public expenditureeffectiveness. The review aims at providing a comprehensivepicture of public expenditure patterns. It focuses on a setof sectors, such as health and education, as well as on twoimportant cross-cutting issues from a policy perspective,the wage bill and the fiscal decentralization.
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