In an election year, many expected Ghana’s economy to completely wither; past events have shown that the power and extravagance of the incumbent tend to impose difficulties on the economy in an election year. But this year’s election has proved the contrary. The economy is thriving and surprisingly, indicators tell of an impressive flourish for an economy that had endured torturous times mainly because of a three-year energy crisis and unpredicted lows in commodity prices.
Seth Terkper for many reasons has been unlucky partly because an energy crisis he cannot really be blamed for had contributed significantly to an economic crisis he had to fight hard to smother. Huge investments in addressing the country’s energy crisis meant more strain on the economy and the man who now holds an ace for weathering the storm.
Last month, the IMF after a review of Ghana’s economy gave a verdict declaring that the Ghanaian economy albeit the challenges was stable; “The IMF, which approved Ghana’s third review under its ECF program on Wednesday, says though there has been progress in stabilizing Ghana’s macroeconomic situation and reducing financial imbalances fiscal risks still remain elevated,” Accra based Citifmonline stated.
The Ghanaian economy has always been one that does not defy easy diagnosis; high public wage bill, poor tax base and fiscal indiscipline. One of the highs of the Terkper era has been the steering of the ship steadily in a storm of economic crisis fuelled by the energy crisis and low commodity prices with good fiscal discipline.
While he has endured a lot of flak for what he cannot be blamed for, the country’s finance minister has managed to avoid an economic recession and it is instructive to note that indeed worthy gains have been made and the economy is poised to emerge stronger according to the African Development Bank (AfDB) and the World Bank.
According to AfDB, the country’s economic woes were partly not within the control of the country’s economic management team; “In 2015, the Ghanaian economy grew at an estimated 3.7%, down from 4% in 2014. The 2015 slowdown resulted from a number of economic challenges, most of which were in play in 2014. These include a 3-year power crisis, rising fiscal deficit and public debt levels, a significant external sector deficit and unpredictably low world market prices for the country’s oil and gold exports,” the AfDB stated in its African Economic Outlook for the year 2016.
These views are enforced by the World Bank which notes that the country has improved its fiscal discipline particularly for an election. While noting that challenges the Ghanaian economy has encountered were not necessarily imposed on it by poor economic management, the bank praised the country for her impressive fiscal discipline.
“Ghana’s fiscal consolidation program is broadly on track. Following the substantial reduction of the fiscal deficit from 10.2%of GDP in 2014 to 6.3% in 2015, Ghana aims to narrow it further to 5%of GDP in 2016. Nevertheless, in July 2016, Ghana revised its budget to reflect the expected shortfall in domestic revenue as a result of unanticipated technical problems in the Jubilee oil field and weaker than expected oil prices,” the World Bank stated in a report on the Ghanaian economy.
But the narrative from the opposition has usually been poisoned by propaganda; Opposition leaders have expectedly played on the unfavourable figures to scare voters leaving out the favourable ones. Indeed, the reality is that amidst the challenges, the Ghanaian economy has thrived, particularly, in an election year when many expected government expenditure to throw the economy out of gear.
The recent B3 credit rating from Moody inferring a stable outlook and the success of the country’s fifth Euro-bond issued last month and which was more than five times over-subscribed tell of an economy that is really on a surge.
No matter where the 2016 Ghanaian elections go, the exploits of Seth Terkper will well be acknowledged and as the World Bank notes in its review, under the stewardship of the country’s calm-mannered and Harvard trained finance minister, the economy has weathered the storm and is on course for steady economic growth culminating to a growth rate of 7.5 percent by 2018.
Credit: Ghana Business Outlook, October 2016. The Ghana Business Outlook is a Ghanaian Business Think Tank that conducts research and writes publications on the Ghanaian business environment. It is headquartered in Accra.
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