The quick turnaround: A nation headed in the right direction

By Constance GBEDZO

Over the years, the Ghana has had many cases of financial irregularities and breaches in procurement laws, resulting in billions of Cedis of losses. Many state-owned enterprises have rather become a burden on the fiscals with heavy outstanding debt obligations.

We have had many disturbing news, in recent years, of huge losses made by the Bank of Ghana (BOG), Ghana COCOBOD, PBC Plc, Cocoa Processing Company, Tema Oil Refinery, and many more have suffered dire financial distress.

Ghana has also witnessed the mysterious revocation of licenses of 7 commercial banks, hundreds of savings and loans and microfinance, and asset management companies between 2017 and 2019.

The state ended up spending GH¢21 billion to take care of depositors and a further GH¢4.5 billion to protect investors of the failed asset management companies.

Interestingly, in an era of ‘Ghana beyond aids’, overall GDP went as low as 0.4% in 2020. Real GDP growth decelerated to 3.3% in 2022 from 5.4% in 2021, compared to an average of 7% between 2017 and 2019. Imports, however, expanded faster than exports in early 2021 while external demand for commodities remained subdued. Public debt which stood at 63% in 2019, 81.1% in 2020 and 82.0% in 2021, hit 93.5% of GDP in 2022.

Overall fiscal deficit doubled to 15.2% in 2020, dropped to 9.2% in 2021, and 9.3% in 2022. This placed Ghana at a significant risk of debt distress.  Ghana has been struggling to service its debts, and faced a balance-of-payments deficit of $934.5 million in the first quarter of 2022, compared with $429.9 million in the same period 2021. Foreign exchange reserves therefore declined to $6.2 billion in 2022 (2.9 months of import cover) from $9.7 billion in 2021 (6.9 months).

This economic slowdown had a considerable impact on households. While poverty rate declined marginally from 11% in 2021 to 10% in 2022, living standards have been negatively impacted by the rising cost of living and unemployment.

Unemployment increased from 11.9% in 2015 to 13.4% in 2021, with youth (ages 15–24) unemployment at an estimated rate of 7.2% in 2021, decline from 7.3% in 2020. Food prices were up by 30% in annual terms in May 2022. Inflation in the country rose to a record of 27.6% in May 2022, then to 54.2% in December 2022, amidst a hike in fuel prices and a near 21% loss in the value of the local currency (the cedi) against the dollar.

Ghana’s economy was described as one suffering grave distress in 2022. National economic policies have lost credibility in the eye of the investors. The economy was no longer creditworthy. The international rating agencies had downgraded the economy of Ghana which had ended in the junk status. Eventually, Ghana was then thrown out of the capital market.

Obviously, the macro economy of Ghana suffered grave consequences of bad economic management for eight (8) years. The “tone at the top” has failed Ghanaians. In response to the rising cost of living, protests hit the capital, Accra over rising inflation.  Ordinary citizens and scholars raised concerns about the mismanagement of the national economy.

To the Ghanaian, corrupt practices have left Ghana with devastating fiscal constraints.

Regardless, there have been monumental policy failures in Ghana over the years, including; the golden age of business, planting for food and jobs, 1D1F, presidential special initiatives, rural irrigation projects, expansion in social services, investments divestiture programs, and many more.

These all-important programs did not inure to the benefit of the national economy. It was the expectation of Ghanaians that these programs were going to diversify Ghana’s economic base, ensure imports substitution, create the necessary jobs and eventually engender growth in GDP, thereby improving the socio-economic well-being of the Ghanaian. These opportunities eluded Ghanaians. By 2021, Ghana’s national economic outlook has, therefore, deteriorated so fast to the level that the “quick fixes” could not salvage the economy.

The real cost of poor governance to the national economy of Ghana has now dawn on its people.

Response from the managers of the economy during this turbulent time has been with many questions. Government also hesitated in heeding the advice of academic scholars and political opponents to halt the excessive borrowing, especially those meant to fund recurrent expenditure, and cut down on expenditure in general. By 2021, when it became obvious that there was need to head to the International Monetary Fund (IMF), government again was reluctant to do so.

Government then resorted to some “quick fixes” to attain fiscal consolidation. Government had announced a 50% cut to subsidized fuel for all ministers and heads of government institutions in April 2022. Ministers’ salaries were temporarily cut by 30%.

The Bank of Ghana tried tightening its monetary policy which was hiked to 27% in 2022 from 14.5% in 2021.  Policies to generate public revenue through taxation such as the famous e-levy, which targeted mobile money transactions have proven politically unpopular. The 1.5% tax on all electronic payments above 100 Ghanaian cedi eventually came into force in May 2022.

All of this did not yield the desired outcome. It became obvious that a more significant effort was required to alter the debt dynamics meaningfully. Indeed, the run-rate to attaining debt sustainability became burdensome on the managers of the economy. As a result, Ghana headed to the IMF, the 17^th Time after Independence.

Ghanaians were told that going to the IMF constitutes resolved commitment to restoring Ghana’s long-term debt sustainability and strengthening macroeconomic stability. The then Finance Minister also said that the debt exchange was to help in restoring Ghana’s capacity to service its debt. He noted that the program would serve as the path towards resetting the economy to a more stable one capable of addressing the development challenges of Ghana.

In the face of an overweening debt-overhand, the Debt Exchange Programme in Ghana became a crucial and complex component of the country’s economic recovery plan, implemented in late 2022 and early 2023 as a key condition for Ghana to secure a $3 billion Extended Credit Facility (ECF) from the International Monetary Fund (IMF).

Under the Fund Program, overall real GDP growth stood at 2.8% for the first three quarters of 2023, higher than the 2023 initial GDP growth target of 1.5%. Also, the Ghana cedi reported a depreciation of 7.2% between February and December 2023, compared to 28.4% during the same period in 2022. The economy also recorded a decline in inflation of 54.2% in December 2022 to 23.2% in December 2023.

Apparently, these gains were not enough to off-set the excruciating economic hardship confronting the average Ghanaian. Many questions linger on the minds of Ghanaians; how about planting for food and jobs, 1D1F, presidential special initiatives, rural irrigation projects, expansion in social services, investments divestiture programs, and many more that were to boost domestic production, ensure import substitution and create the requisite jobs?

Ultimately, a debt exchange program is a symptom of a deeper problem: a prolonged period of fiscal imprudence and ineffective economic management. The measures to prevent it are those that focus on building a resilient and sustainable economy from the ground up.

The state has actually failed its people. Leadership had delivered HOPELESSNESS to the Ghanaian. On the basis of this monumental failure, Ghanaians have delivered overwhelming support for the NDC’s John Mahama whose economic policies proposals were deemed superior in addressing their socio-economic woes.

Since coming into office in January 2025, the Mahama administration has focused on restoring economic stability after a period of high inflation and currency depreciation. Key indicators that suggest a positive trajectory include a significant drop in inflation, which has fallen to its lowest level in recent years.

This has led to a stabilization of market prices for goods and services, providing relief to households.  Additionally, the government has aimed to manage debt and reform the banking sector to restore confidence and create a more stable financial environment.

Nonetheless, a major pillar of Mahama’s government is the “Big Push” initiative, an ambitious infrastructure program designed to modernize the country’s road network and other critical public works.

This program came with breaking ground on major road projects and dualizing key highways to improve connectivity and ease traffic congestion, bridge rehabilitation and implementing a policy to ensure contractors are paid on time, and sometimes with upfront funds, to accelerate project completion and avoid delays.

The government has also introduced several social policies and governance reforms aimed at improving the lives of Ghanaians and increasing accountability. Examples of these are; Mahama’s flagship 24-Hour Economy which is strategic policy designed to encourage and support businesses to operate around the clock, with the goal of increasing productivity, promoting import substitution, and creating more well-paying jobs. His Environmental Initiatives: policies like the “Tree for Life” and “Blue Water Initiative” have been launched to reclaim degraded forests and water bodies affected by illegal mining, demonstrating a commitment to environmental restoration. His comprehensive Code of Conduct and Ethics for political appointees has been unveiled to promote transparency, accountability, and ethical leadership within the government. This includes strict guidelines on conflicts of interest, the use of public funds, and asset declaration.

Generally, Mahama government’s efforts from macroeconomic stabilization to large-scale infrastructure projects and targeted social reforms, resonate with Ghanaians, and are viewed as indicators of progress. Currently, under Mahama, Ghana is living with a PLAN, living to achieve a goal, and working towards achieving such a plan.

Amidst fiscal discipline and prudent budgeting, effective debt management strategy and promoting economic growth, laced with transparency and accountability, Mahama is about making history.

Just in eight months of Mahama’s second coming, macroeconomic performances showed a strong start, with a Q1 2025 GDP growth of 5.3%, surpassing the 4.9% growth in Q1 2024 and beating initial forecasts. Headline inflation has fallen significantly, from 23.8% in December 2024 to as low as 12.1% by July 2025. The public debt-to-GDP ratio has fallen sharply to 43.8% by June 2025, a dramatic decrease from the 61.8% at the end of 2024.

Obviously, for eight (8) good years, Ghana had lived without a goal, and in the process lost focus in delivering socio-economic transformation for the people. As an economic watcher, I wish to agree to a statement attributed to a renowned economist, Mr. Kwame Pianin that, “If someone had told me that eight years ago that Ghana could be governed this effectively-with just 60 ministers, not a single scandal in eight months, and an economy managed so prudently without superfluous economic management team and digital head-I would never have believed it.”

Indeed, hope has been restored with vigour and the political by  John Mahama to just deliver the public good. Keep your good works, John!! Ghanaians are highly appreciative.

The writer is a Risk & Enterprise Development Expert