The recent pronouncement by the government that the economy has returned to its pre-COVID-19 status is a remarkable achievement. As outlined by the Deputy Minister for Finance, Dr. Alex Ampaabeng, during the town hall meeting in Tamale, three successive quarters of positive economic growth, with inflation projected to hit 15% by year-end, showcase Ghana’s resilience in bouncing back from the pandemic-induced economic recession.
However, as much as these gains are commendable, it is crucial for the government to ensure that these hard-fought successes are consolidated to prevent future collapses. The government is boasting about the gains on the back of claims from its opponents that gross mismanagement steered the economy into a ditch. It is only prudent, for want of a better word, that the government proved critics wrong. Anything to the contrary will only give credence to the long-held conviction of the opponents.
In 2017, the government took over an economy that it said was grappling with problems and had even sought a bailout from the International Monetary Fund. Inflation in 2016 was 15.4%. But the government managed to reduce it to 11.8% at the end of 2017. In 2018 and 2019, inflation reduced to 9.4% and 7.9% respectively, until COVID-19 struck in 2020.
Unfortunately, the COVID-19 pandemic threw the global economy into disarray and Ghana was not spared. Last year, inflation surged to over 54%, but the country has clawed its way back to a more manageable inflation rate of 21.5%, with hopes of reaching 15% by December, which is no mean achievement.
The government’s achievement in stabilising the economy is further backed by growth rates of 4.7% and 6.9% in the first and second quarters of 2024, respectively. Yet these figures, while encouraging, should not lead the government into complacency.We think that a robust economy cannot be sustained solely through short-term recovery. There is an urgent need to implement long-term strategies that will fortify the economy against future shocks.
In this vein, the government’s IMF-supported Post-COVID-19 Programme for Economic Growth (PC-PEG), which appears to be beneficial to our economy, must be reviewed periodically and improved upon.
It is our hope that the current IMF programme will actually be the last. Ghanaians will recall that this government tried not to seek an IMF bailout after the previous one in 2015. However, as the saying goes, if wishes were horses, beggars would ride. So, today, we find ourselves at the behest of the Briton Wood’s Institution again.
At this point, after about 19 appearances at the institution, we can only conclude that the IMF only manages the situation and does not cure it. Otherwise, governments have disappointed us, the citizens, for not being able to build on the foundations these IMF bailouts laid anytime we sought their assistance.
The Chronicle is of the opinion that one of the key areas where the government must be relentless is maintaining fiscal discipline.Given that this is a year for elections, the temptation for the government of the day to overspend is there, but as the administration has promised that they should have no appetite for spending more than budgeted to canvass for votes.
The pandemic exacerbated Ghana’s public debt, and despite the ongoing recovery, the risk of debt distress remains a pressing concern. Fiscal prudence, therefore, must be at the core of the government’s policy framework moving forward.
We are of the view that inflation, while projected to fall to 15% by the end of this year, still presents a significant threat to the purchasing power of Ghanaians. The government must remain vigilant in monitoring inflationary trends and put in place mechanisms to control price volatility, especially for essential commodities such as food and fuel.
Economic experts have informed us that proactive measures like boosting local production, improving supply chain efficiencies, and curbing speculative practices in the market are necessary to protect the gain made.
It is our position to the government that while the return to the pre-COVID economic era is a remarkable achievement, this, to us, must be seen as the beginning, not the end, of a journey toward sustainable economic growth.
The government must be mindful of the potential for future shocks, whether global or domestic, and ensure that the foundations of the economy are strong enough to withstand them.
