Ghana president commits to restore economy to pre-Covid levels

Ghana's President, Nana Akufo Addo, has set his eyes on restoring the country's economy to pre-COVID levels within the next 22 months. The President is scheduled to deliver a state of the nation address at parliament on Wednesday, outlining his plans for economic recovery. Courage Boti, an Economist at GCB Capital, shed light on the challenges and opportunities facing Ghana as it navigates through the aftermath of the COVID-19 pandemic and the Russia-Ukraine conflict. The President's commitment to reviving the economy comes at a crucial time when the country is grappling with the adverse effects of the global crises that have unfolded in recent years. Boti pointed out that the focus of the government is now on restoring macroeconomic balance, fiscal sustainability, and debt management. He highlighted the importance of the current IMF program, which aims to bring Ghana's debt levels to a sustainable threshold of 55 percent of GDP. Boti acknowledged that Ghana had built some economic fundamentals before the crisis, but the vulnerabilities and underlying debt issues were exposed by the impact of COVID-19 and global market conditions. The country's debt obligations have increased significantly, limiting its ability to allocate resources to priority areas such as growth-enhancing spending. As a result, fiscal controls and consolidation are seen as vital strategies to address the economic challenges. A key focus for Ghana is securing a three billion dollar loan from the IMF, which is expected to be a game-changer for the economy. The loan comes with conditions that Ghana must adhere to, and Boti emphasized the importance of utilizing the funds strategically to drive economic recovery. However, with the loan process still underway, Boti noted that not many immediate changes have been observed in the economic landscape. In the meantime, Ghana is taking steps to curtail unnecessary expenditures and preserve its reserves. The government's decision to discourage the importation of non-essential goods, such as rice, demonstrates a commitment to manage its resources efficiently. Boti suggested that before the IMF intervention, the government should focus on controlling expenses and implementing measures to improve fiscal discipline. Furthermore, Ghana is engaged in discussions with private creditors as part of the debt restructuring process. The country is following the G20 Common Debt Framework to negotiate terms with both bilateral and commercial creditors. While bilateral creditors have been accommodating, Boti highlighted the need for more extensive negotiations with commercial creditors, who hold a substantial portion of Ghana's external debt. The Finance Minister's stance on private creditors potentially bearing more losses indicates Ghana's determination to achieve significant debt reduction and restore fiscal sustainability. Boti emphasized the importance of reaching a consensus with all creditors to create a viable path towards economic recovery and debt management. As Ghana navigates its way through the economic challenges posed by the pandemic and global events, President Nana Akufo Addo's commitment to reviving the economy remains steadfast. With a strategic approach to debt management, fiscal discipline, and engagement with creditors, Ghana aims to overcome the current economic hurdles and return to a path of sustainable growth and development.