Mr Franklin Cudjoe, the founding president of Imani Africa, has stated that Ghana’s economy is no stranger to the never-ending cycle of booms and busts.
He described a history of a relatively stable macroeconomic environment informed by prudent fiscal policy backed by sound monetary policy in between elections, followed by fiscal indiscipline combined with loose monetary policies during election periods.
“This political business cycle is very costly economically, socially, and politically, with fiscal consolidation measures necessitating painful, unevenly distributed adjustment costs.”
“Eventually, this translates into higher inflation, higher public debt, and the associated debt servicing obligations, creating uncertainty for the business and investment communities.”
“There is considerable worry over the trajectory of government’s current macroeconomic framework and its ability to attract and retain capital towards enabling a structural economic transformation as Ghana competes with the rest of the continent for critical capital. Ghana’s domestic savings to GDP stood at 22.38 % in 2019 (15% average for SSA) whilst her investment needs exceed 30% of GDP (21% average for SSA) thus creating an external funding gap.
“Exactly how this widening gap gets narrowed without undue reliance on expensive external borrowing is government’s current dilemma.”
