Development economist Dr. George Domfeh says Ghana’s economic challenges during the Nana Addo Dankwa Akufo-Addo era were largely driven by external shocks, particularly the COVID-19 pandemic, rather than poor management.
Speaking on Business Edge on Metro TV, Dr. Domfeh stressed that Ghana’s economy was performing well before the pandemic hit.
“The economy started growing very well. Both the real sector and the oil sector grew strongly. In 2019, the economy grew at 6.5 percent, and inflation was 7.9 percent at the end of December,” he said.
He explained that the country had even achieved fiscal discipline within the framework of the Fiscal Responsibility Act of 2018, which capped the fiscal deficit at 5 percent of GDP.
“The budget read in November 2019 projected spending of 85 billion cedis while revenues were expected to be 66 billion. This would have translated into a fiscal deficit of 4.7 percent well within the law,” Domfeh said.
However, the onset of COVID-19 disrupted these plans. Revenue fell short by 11 billion cedis, while expenditure ballooned to over 100 billion cedis, forcing the government to borrow heavily.
“Government revenue dropped to 55 billion, expenditure shot up to 104 billion, and the debt-to-GDP ratio jumped from 62.5 percent to 76 percent. This was not mismanagement; it was the unavoidable impact of the pandemic,” he noted.
Dr. Domfeh said that the cedi had remained stable for over five years before COVID-19, moving gradually from GH¢4.20 to GH¢6.20 to the dollar between 2017 and 2022, one of the best records in the currency’s history.
“For 61 good months, dollar to cedi was not a problem. It stagnated,” he said.
He added that the government’s debt restructuring programme, which included adjustments to commercial, eurobond, bilateral, and domestic debt, helped reduce the total debt from $60 billion at the end of 2021 to $49.3 billion by March 2024.
“Yes, the debt in terms of cedi has subsided, that is true, but let us not run away from the fact that it is the debt restructuring that has brought us to where we are,” Domfeh said.
The economist urged Ghanaians and policymakers to understand the effects of global crises on the local economy and avoid politicising the pandemic’s economic impact.
“We need not do politics over this. We really must learn from it and move forward as a country,” he said.
