Ghana’s Economy May Not Recover By 2025 – Dr. Ishmael Yamson

Economist, Dr. Ishmael Yamson has indicated that Ghana’s economy may not experience recovery in 2025 as predicted by the World Bank.

According to him, government looks unprepared to implement the tough structural reforms prescribed by the International Monetary Fund (IMF).

He suggested that government is also not financially disciplined and not ready to rationalise its expenditure.

“Unless I see it happen, fine. But for now I don’t believe it will come to pass”, he doubted.

Dr. Yamson made the statements when he appeared on the PM Express Business Edition on July 27, 2023 with George Wiafe.

He is of the view that it will take Ghana some time to fully recover from the economic challenges currently facing the country.

“We should not forget the projection also depends on external development’s favouring the country. In addition, government must also implement some programmes, which we all know may be difficult”, he said.

Background

The World Bank in its report titled “Price Surge: Unraveling Inflation’s Toll on Poverty and Food Security,” indicated that that Ghana’s economy is expected to recover to its full potential by 2025.

The Bretton Wood institution noted that “economic growth is projected to slow down to 1.5% in 2023 and remain depressed in 2024 at 2.8% but the economy is expected to recover to its potential growth by 2025”.

It also added that “growth will begin to recover to its potential by 2025 as drag from fiscal consolidation fades and macroeconomic stabilisation and structural reforms start bearing fruit.”

The report recommended that in addition to managing the immediate macroeconomic crisis, the authorities would be well served by embarking on structural reforms to tackle its root causes, boost economic growth, and build economic resilience:

The Bretton Wood institution advised Ghana to sustainably collect more domestic revenue, notably by streamlining tax incentive regimes and improving revenue administration.

Ghana’s Economic crises and the way forward 

Dr. Yamson rejected assertions that the current economic challenges faced by the country can be solely attributed to the COVID-19 pandemic and the Russia/Ukraine war.

He explained that challenges with Ghana’s debt issue were there before the Russia Ukraine war started.

According to him, Ghana would not have faced the economic challenges if government had been prudent.

“When I hear people saying that IMF conditionalities, I get worried because when you look at the IMF  programme document, it is government that has  proposed to the Fund that it is planning to implement some programmes that will help turn around the economy”, Dr. Yamson argued.  

Elections and Ghana’s economy

The current challenge facing the country is more of an expenditure issue rather than Revenue.

This is because over the year, government continued to spend when the necessary resources were not available to finance government expenditure.

Data from the IMF, and the World Bank have showed that Ghana’s economy has always come under extreme pressure, a year after elections.

“Expenditure control is a big issue in an election year and everything must be done to check it”, he warned.

Cecilia Dapaah’s issue and currencies outside banks

Data from the Bank of Ghana showed that monies outside the operations of commercial banks in the country increased from ¢22.1 billion from May 2022 to ¢31.2 billion May 2023.

The issues have raised concerns among some banking sector players.

Dr. Yamson advised the Bank of Ghana deal with the situation.

On Cecilia Dapaah’s issue, Dr. Yamson said the decision the former minister to hoard over a million dollars in her house defeats government’s drive to encourage savings at the banks.

“The whole idea about this amount of money sitting in someone’s home can be described as worrying and disappointing. You are telling us ordinary people to put our monies in the bank , but you the public official will not do that and that is not good”.