Ghana’s economic landscape, marked by years of missed opportunities and fiscal imbalances, appears to be turning a corner, according to Professor Godfred Bokpin of the University of Ghana Business School. He attributes this positive shift to a renewed commitment to fiscal discipline, emphasizing that the recent appreciation of the cedi is a direct consequence of tough but necessary reforms. Professor Bokpin argues that these reforms, while delayed, are finally aligning with the advice of economists and policy analysts who, since the onset of the COVID-19 pandemic, have advocated for reduced government spending and a gradual approach to fiscal consolidation. He commends the current leadership for demonstrating the political will to steer the country towards economic stability, fulfilling campaign promises centered on fiscal responsibility. This decisive leadership, in Professor Bokpin’s view, is evident in the difficult decisions being made to correct past economic missteps.
The previous administration’s response to the COVID-19 crisis, characterized by expansive spending, is identified by Professor Bokpin as a key contributor to the nation’s economic woes. He argues that this approach exacerbated inflationary pressures and deepened economic hardship, contrasting sharply with the fiscal prudence now being pursued. The Bank of Ghana’s intervention in 2022 to address excess liquidity, while necessary, further highlighted the consequences of the preceding period of unrestrained spending. This intervention, according to Bokpin, underscored the detrimental effects of poor coordination between fiscal and monetary policies, which ultimately contributed to the weakening of the Ghanaian economy and pushed a significant portion of the population into poverty.
Professor Bokpin’s analysis delves into Ghana’s performance under the 2024 IMF program, highlighting both successes and shortcomings. While acknowledging positive strides in GDP growth and international reserves, he points to the country’s failure to meet critical fiscal consolidation targets. Specifically, he notes that Ghana fell significantly short of the primary surplus target of 0.5% of GDP, instead recording a negative surplus exceeding 3%. This failure, he suggests, underscores the challenges of aligning fiscal policy with the stringent requirements of the IMF program and achieving sustainable economic stability.
Despite these setbacks in meeting IMF targets, Professor Bokpin observes a significant shift in the government’s fiscal strategy in 2025. This shift, he argues, demonstrates a commitment to corrective measures aimed at addressing the fiscal imbalances that have plagued the Ghanaian economy. The 2025 budget, in his assessment, reflects a renewed focus on fiscal discipline and a concerted effort to realign the country’s economic trajectory with the objectives of the IMF program. This commitment to fiscal consolidation is evident in the projected shift from a negative surplus to a positive primary balance of 1.5% of GDP.
The implementation of the 2025 budget, according to Professor Bokpin, marks a turning point in Ghana’s fiscal management. The projected positive primary balance represents a significant improvement from the previous negative surplus and signals a move towards greater fiscal sustainability. This change in direction, driven by the current administration’s commitment to fiscal discipline, holds promise for a more stable and resilient Ghanaian economy. The improved fiscal outlook, coupled with the recent appreciation of the cedi, suggests that the government’s corrective measures are beginning to yield positive results.
In conclusion, Professor Bokpin’s analysis paints a picture of a Ghanaian economy transitioning from a period of fiscal instability to one of renewed hope. While acknowledging past missteps and the challenges of meeting IMF targets, he emphasizes the significance of the current government’s commitment to fiscal discipline. The tough decisions being made, reflected in the 2025 budget, signal a determination to address long-standing economic imbalances and chart a course towards sustainable growth. The positive movement in the cedi and the projected positive primary balance offer tangible evidence of progress, suggesting that Ghana’s renewed focus on fiscal responsibility is indeed beginning to bear fruit. This positive trajectory, if sustained, holds the potential to unlock greater economic opportunities and improve the lives of Ghanaians.
