The president of the republic of Ghana, Nana Addo-Dankwa Akufo-Addo during his national address on Sunday, October 30 2022, relied on an old Akan axiom, “Sika Mp3 Dede”, to wit: money doesn’t like noise, when he called on fellow Ghanaians to end false speculations about the Cedi.
Ghana’s economy has rapidly transfigured from a comatose to a calamitous stage. It is for this reason that managers of the economy continue to seek a bailout from the International Monetary Fund (IMF).
In the past, IMF bailouts have enhanced macroeconomic stability in Ghana.
It cannot be gainsaid the fact that, over the years, fiscal discipline in the country have depended largely on IMF bailout programmes, whereas finding answers to Ghana’s current economic woes should have rested purely in the hands of managers of the economy.
However, managers of the economy are unable to craft prudent measures that can reverse Ghana’s current economic mishap.
This is because lack of transparency, accountability and corruption have been a catalyst in plunging Ghana into its current economic mess.
As a result, the country is heading towards a full blown economic recession, despite the introduction of a new electronic transaction levy (popularly known as e-levy) which meant a 1.5% tax on all electronic transfers exceeding GHS100 which has dreadfully failed to deliver the anticipated results.
In addition, Ghana’s economic misery became pronounce at the beginning of 2022 as it gradually plummeted while tumbling into a complete economic recession.
From January to September 2022, inflation increased from 13.9% to 38.2% respectively, with experts projecting a higher rate of 98% by the end of the year.
On another hand, there continues to be increases in the prices of Petrol – 88.6% and Diesel – 128.6% respectively.
Similarly, since January public transport fares have soared 100%. Likewise, necessities such as water and electricity continue to increase, making life extremely excruciating for the ordinary Ghanaian.
Furthermore, the World Bank articulates that within sub-Sarah Africa, Ghana has the highest food prices and on daily basis the price of food keeps rising steeply.
Ghana’s interest rate of 30% and lending rate of 40% are the highest in Africa. Meanwhile, the country’s currency (cedi) continues to perform abysmally globally.
Another major challenge which further exacerbates Ghana’s economic woes at present is poor international credit rating which has resulted in Ghana being relegated as it is perforated with untenable debts which keeps rising on daily basis.
It is worthy to note that, the inability of mangers of the economy to have fiscal discipline makes it difficult for Ghana to gain access to global capital markets.
The cascading effect of this is that the country is unable to raise nearly 4 billion Eurobond needed to service Ghana’s debts.
Currently, Ghana’s debts stand at 90% and is anticipated to reach 106% by the end of this year.
Without a doubt Ghana’s economy continues to be in a distress situation as 90% of its revenues are geared towards serving debts.
Although government blames the current economic woes on COVID-19 and Russia’s invasion of Ukraine, the World Bank clearly articulates that these exogenous shocks are not entirely responsible for Ghana’s current economic challenges but mismanagement of public funds which includes the high levels of wasteful and excessive government expenditure.
For example, it is bizarre for Ghana to have nearly 120 ministers and over 1200 individuals employed at the presidency.
Also, Ghana’s failure to produce for export but rather rely on imports for daily consumption accounts for the permanent incongruity in balance of trade.
The spilling effect is that the Ghanaian cedi is destined to be intrinsically weak as opposed to the dollar, leading to high import prices that hit consumers.
Thus, it is key to fix these numerous problems and on the other hand, it is also critical for managers of the Ghanaian economy to be transparent and exhibit a high sense of accountability.
Undeniably, institutional reforms are needed so that Ghana does not find itself in its current state after attaining a bailout from the IMF.
Aaron Yaw Ahali
