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OPINION: Ghana’s economy – a tale of two governments

Neil Owusu/NPP national communications team/economy

The writer, Neil Owusu is a member of the NPP national communications team

Ghana’s economic path to date has been marked by significant milestones, shaped by the policies and governance of two dominant political parties: the National Democratic Congress (NDC) and the New Patriotic Party (NPP). Both parties have had four terms each, since the inauguration of the Fourth Republic on 7 January 1993, to manage the resources of our beloved country, Ghana.

In this article, I will delve into proven data on Ghana’s economic trajectory during the period of the NDC, from the Mills-Mahama/Mahama-Amissah-Arthur presidency to the stewardship of the NPP under the Nana Akufo-Addo-Bawumia government, highlighting notable achievements and challenges under each administration.

The economy bequeathed to the NDC by the outgoing president John Agyekum Kufuor when the party took office in 2009 was in excellent condition, with all economic indicators moving in the right direction. The rate of expansion in all sectors of the economy was obvious to the public.

Despite the lack of oil, economic growth increased from 3.7% to 9.1% between December 2000 and December 2008. Under the Mills-Mahama administration, the economy (with oil) had a growth rate of 7.9% at the end of December 2010, rising to 17.4% by the end of 2011.

With this rate of increase in the oil-added economy, Ghanaians would have expected continued growth, but real GDP growth fell swiftly and persistently after 2011, reaching 2.2% in 2015. Between 2012 and 2016, the Mahama-Amissah-Arthur-led administration slowed the economic development of our beloved country, resulting in a 5% drop in GDP in dollar terms, with GDP per capita declining by 12%, which cumulated to an abysmal 3.4% growth rate as of the end of 2016.

Crisis? What crisis?

The Akufo-Addo-Bawumia administration inherited an economic crisis in 2017 with a GDP growth rate of 3.4% in 2016, but successfully turned it around to achieve a growth rate of 6.51% by 2019, making us one of the fastest-growing economies in the world.

However, the COVID-19 pandemic, which had a devastating impact on the global economy as countries around the world closed their borders and imposed travel restrictions, caused a 3.4% decline in global GDP in 2020, equivalent to over $2 trillion in lost output.

Despite this, the global economy quickly recovered, and GDP surpassed $96.3 trillion in 2021. Global economic growth is expected to grow gradually despite the impact of COVID-19 and the ongoing war between Russia and Ukraine. For this reason, Ghana’s provisional GDP growth rate for 2023 is 2.9%, according to the Ghana Statistical Service, and it is expected to grow further by the end of this year.

Under the former president John Dramani Mahama, Ghana’s economic woes were typified by negligent management of the government’s finances, particularly in the months preceding the 2012 elections. Under his presidency, the economy had a 12.2% GDP fiscal deficit at the end of 2012, 11.7% in 2013 and 11.9% in 2014.

This plunged Ghana’s public finances into a deep fiscal hole following the reckless increases in public expenditure during the 2012 election year and subsequent years. This was the first time in the country’s history that double-digit fiscal deficits were recorded for three consecutive years. Due to this dire financial situation, inadequate policy execution and lack of credibility, Ghana asked for an IMF bailout.

On the other hand, the Nana Addo-led administration, having successfully renegotiated and completed the IMF conditionalities under the government of His Excellency John Dramani Mahama, requested an IMF-supported programme in July 2022 because Ghana was facing an economic and financial crisis caused by inherent weaknesses and significant external shocks.

The government of the New Patriotic Party has achieved substantial progress under the programme, which the IMF board approved in May 2023. Increased fiscal deficits, which have since been reduced to 4% of GDP, and high public debt levels, combined with the effects of the COVID-19 pandemic, Russia’s war in Ukraine and global monetary policy tightening, caused a drop in international investor confidence, resulting in a loss of international market access.

This increased pressure on domestic finance prompted the government to turn to monetary borrowing from the central bank, which helped to support the government’s programmes and saved the economy from collapsing.

The Ghanaian economy is now exhibiting indications of stabilisation because of the government’s consistent implementation of an IMF-supported economic programme aimed at restoring macroeconomic stability, ensuring debt sustainability and laying the groundwork for higher and more inclusive growth.

The writer is Neil Owusu, a member of the NPP’s national communications team

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