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John Dramani Mahama has made a historic return to the presidency, but the real challenge lies ahead—reviving Ghana’s struggling economy and addressing the shortcomings of the previous Akufo-Addo administration. The stakes are high, and the road ahead demands difficult decisions.
Balancing social relief with fiscal discipline is crucial, especially as pressure mounts to fulfill the numerous promises made during the campaign. However, Ghana’s economy remains in a fragile state, having suffered both domestic and international setbacks, including a complete shutdown from the global capital market.
A Path to Recovery?
Restoring financial stability will require urgent recalibration. But can Mahama 2.0 steer Ghana out of its current economic crisis?
Much like his predecessor, President Nana Akufo-Addo, Mahama secured victory with ambitious policies designed to spur job creation, economic growth, and industrialization. While Akufo-Addo introduced the One-District-One-Factory initiative, Mahama has proposed a 24-hour economy to stimulate productivity.
For major infrastructure projects, Mahama’s Big Push seeks to replace policies like Year of Roads, One-District-One-Dam, and Agenda 111, which were central to the previous administration.
Yet, despite these grand promises, the past government struggled with persistent currency depreciation, rising inflation, a high cost of living, and limited private sector growth. Additionally, external shocks—including the COVID-19 pandemic and global commodity price fluctuations—exposed deep vulnerabilities in Ghana’s economy, ultimately leading to a $3 billion IMF bailout.
Lingering Challenges and a New Approach
As Mahama assembles his team to execute his vision, many of the economic challenges that led to the downfall of the NPP government remain unresolved. Recognizing this reality, his first major move is to initiate a national economic dialogue, bringing stakeholders together to address economic challenges and align public expectations with government policies.
With public debt exceeding 70% of GDP, this dialogue is timely. However, discussions alone won’t be enough—tough decisions must follow. Debt servicing, including the Domestic Debt Exchange Programme (DDEP) and External Debt Restructuring, already consumes nearly half of government revenue, making Ghana’s debt levels highly unsustainable.
Mahama’s first budget in March will be a defining moment—a test of his policy direction and economic strategy. The challenge lies in balancing domestic revenue generation with tax relief. His promise to scrap unpopular taxes, such as the E-Levy, Betting Tax, and COVID-19 Levy, raises concerns about revenue shortfalls. The key question remains: how will the government compensate for the billions of cedis in lost revenue?
Without sustainable revenue streams, Ghana’s massive energy sector debt will remain unresolved, leading to continued inefficiencies in infrastructure development. Finance Minister Dr. Cassiel Ato Forson has set a goal to increase the tax revenue-to-GDP ratio from 13.8% to 16%, but the specifics of this strategy are yet to be outlined. The upcoming budget must provide clear answers.
Stabilizing the Cedi and Investor Confidence
Managing the local currency will be another critical test for Mahama’s administration. Investors, businesses, and ordinary Ghanaians are eager to see concrete steps toward stabilizing the cedi’s value against major trading currencies. Whether through increased foreign direct investment (FDI), strategic exports, or leveraging the Gold Board initiative, Mahama must deploy a robust strategy. Strengthening foreign exchange reserves at the Bank of Ghana should also be a priority.
Adding to the uncertainty is the future of the IMF programme, with Mahama and Dr. Ato Forson offering conflicting statements on whether it will be extended. Regardless of the outcome, there is a strong appetite for a programme review, potentially allowing more flexibility for growth-oriented spending. However, any adjustments must be carefully managed to sustain investor confidence, which, though fragile, has seen slight improvement with the change in government.
A New Beginning or More of the Same?
For many Ghanaians, Mahama’s return—and that of the National Democratic Congress (NDC)—offers hope for economic recovery. The recent oversubscription of treasury bills and rejection of certain bids signal renewed optimism about the government’s economic reset agenda.
However, history has shown that the goodwill accompanying new administrations is often short-lived. Mahama must learn from past mistakes—both his own and those of the previous government—to prevent Ghana from repeating its economic missteps.
In 2019, Ghana was the fastest-growing economy in the world. Now, the challenge is to reclaim that momentum.
Yes, the economy needs a reset to improve living standards and ensure shared prosperity. But Mahama’s true test lies ahead: Can he transform his vision into a sustainable economic recovery for Ghana? Only time will tell.
For now, we wish the government well.
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