Editorial: Economic risks linger without deeper reform

Although the economy has shown signs of stability after years of turbulence with a sharp cedi rebound, improved fiscal balances and easing inflation, analysts caution gains could be short-lived without tackling deeper structural weaknesses.

A mid-year economic review by Emerging Markets (EM) Advisory described the cedi’s 42.6 percent appreciation against the US dollar in first-half 2025 as “genuinely unprecedented” in sub-Saharan Africa.

The rally has almost reversed depreciation suffered between 2022 and 2024 – driven by IMF disbursements, surging gold prices and exports, rising remittances and central bank intervention.

This notwithstanding, EM Advisory cautions that underlying weaknesses – including productivity gaps, import dependence and fiscal pressures – remain unresolved.

The report notes that currency rallies can be fleeting, as questions linger about how the economy will cope once gold prices normalise or the IMF programme ends.

Additionally, the report highlighted capacity constraints in project delivery, citing cases of contractors drawing loans without completing works and persistent under-budgeting in the energy sector. These issues, it said, point to “a deeper capacity deficit” in the public service.

Government’s GH₵2.45billion recapitalisation of the National Investment Bank lifted its capital adequacy ratio from negative 53 percent to positive 23 percent, safeguarding deposits and jobs – but concerns remain about non-performing loans across the wider banking sector.

Near-term risks include commodity price swings, a potential cedi reversal and fiscal pressures from political decisions. Medium-term challenges range from rising debt servicing to unresolved energy deficits and climate shocks to agriculture.

Government has been urged to strengthen the Sinking Fund, broaden the tax base and focus on high-impact, revenue-generating projects. It further cautioned that without deeper reforms, the country risks sliding back into its “familiar boom-bust cycle”.

The review flagged several challenges. For instance, Customs revenues fell short by             GH₵1.6billion – partly due to a stronger cedi shrinking the local value of imports.

The public wage bill overshot by GH₵1.3billion – reflecting late-2024 recruitment and persistent payroll inefficiencies with thousands of unverified or ghost workers uncovered while repayment obligations remain steep despite recent restructuring, with GH₵20billion due in 2026 and over GH₵50billion for 2027.