A team of economists has proposed measures to stabilize Ghana’s economy, citing weak revenue generation and poor management as primary concerns. Key recommendations include fiscal discipline, tax reforms, exchange rate stabilization, and improved public sector efficiency, presented at the National Economic Dialogue 2025 by economist Leslie Bright Mensah.
A team of economists has outlined measures to stabilize Ghana’s economy, highlighting inadequate revenue generation, ineffective public expenditure management, and excessive borrowing as primary issues contributing to the nation’s persistent economic troubles. During the National Economic Dialogue (NED) 2025, economist Leslie Bright Mensah presented an interim report from the Macroeconomic Stability Group, emphasizing strategies to tackle these longstanding economic challenges, including fiscal discipline, tax reforms, exchange rate stability, and enhanced efficiency in public sectors.
According to Mr. Mensah, sustaining macroeconomic stability is vital yet remains challenging for Ghana. He attributes the recent economic crisis to unsustainable fiscal practices, marked by significant budget deficits and increasing debt servicing costs. He noted that “In the five years leading up to the 2022 economic crisis, Ghana’s budget deficit averaged 9 percent of GDP, while debt servicing accounted for nearly 70 percent of public revenue in 2021. This led to the fiscal difficulties we are still experiencing today.”
Moreover, Ghana has faced prolonged high inflation, consistently exceeding 20 percent for 34 successive months, a stark contrast to only six months in the previous 18 years. The depreciation of the Ghanaian cedi, which lost 19.2 percent of its value in 2024, represents another significant concern for the economy.
To bolster the economy, the group recommended simplifying the tax structure and ensuring consistency in tax policy. Mr. Mensah stressed that “the government must adopt a medium-term approach to tax policies to give businesses certainty and encourage compliance.” They also advocated for a review of the VAT system to minimize the more than 50 percent compliance gap and proposed lowering VAT rates to augment collection. Furthermore, they urged technological advancements in property tax administration to enhance compliance, observing that the Accra Metropolitan Assembly suffers from over 60 percent property tax under-collection.
Mr. Mensah emphasized strict enforcement of financial laws, particularly the Public Financial Management (PFM) Act, which mandates regular government expenditure reporting. He noted that “many of these reporting requirements have not been followed. If the Finance Minister ensures compliance with the PFM Act, it will help strengthen fiscal discipline.” The group also recommended a reevaluation of the Fiscal Responsibility Act to limit excessive government spending and boost parliamentary oversight.
Regarding currency stabilization, Mr. Mensah called for enhanced regulation of foreign exchange bureaus, abolishing illegal forex markets, and improved coordination between the Ministry of Finance and the Bank of Ghana. He further advocated integrating fintech liquidity into the formal banking system and reviewing foreign exchange retention policies in industries like mining to alleviate pressures on the local currency.
The team proposed recapitalizing the Bank of Ghana to enhance its effectiveness in managing monetary policy and suggested conducting a feasibility study on non-interest banking to provide alternative financing options and foster financial inclusion.
Mr. Mensah concluded that implementing these recommendations would restore investor confidence, stabilize the exchange rate, and create a more predictable business environment. The National Economic Dialogue 2025 gathered economic experts, policymakers, and government officials to discuss strengthening Ghana’s economy and preventing future crises.
In conclusion, Ghana’s economic landscape requires urgent reforms to address key issues such as fiscal discipline, revenue generation, and exchange rate stability. The recommendations presented by the economists aim to foster a sustainable and predictable economic environment by focusing on effective public finance management and regulatory frameworks. Implementing these measures will be critical for restoring investor confidence and preventing future economic challenges in Ghana.
Original Source: www.graphic.com.gh
