BY Nadia Ntiamoah
Ghana’s economic outlook is increasingly being shaped by a mix of external shocks and inherited domestic constraints, with former Finance Minister Seth Terkper warning that the country remains highly vulnerable despite signs of gradual recovery.
Speaking on PM Express Business Edition on Joy News, Terkper painted a picture of an economy navigating uncertainty, where global tensions—particularly in the Middle East involving Iran—could trigger a fresh surge in petroleum prices, with ripple effects on inflation, fuel costs, and the stability of the cedi.
He cautioned that such shocks are not unexpected and should form part of Ghana’s long-term economic planning framework.
According to him, economies are inherently cyclical and prone to crises, whether domestic or external. He stressed that governments must anticipate these fluctuations rather than react belatedly.
He explained that factors such as food import dependency and limited reserves can quickly weaken the currency when global conditions shift, underscoring the fragile balance Ghana must maintain.
Terkper’s comments come at a time when the Mahama administration is still grappling with the after-effects of a debt crisis and the constraints of an ongoing IMF programme.
He revealed that upon assuming office, the government was effectively locked out of both domestic and international bond markets due to prior debt restructuring measures, including haircuts and suspended repayments.
These limitations, he noted, forced the government to rely heavily on short-term Treasury bills, restricting its ability to finance long-term infrastructure and capital-intensive projects. As a result, key investments in the real sector were delayed, directly slowing the pace of job creation despite promises outlined in the NDC’s manifesto.
He argued that the administration’s initial focus had to be on stabilisation rather than expansion.
“You cannot run an economy for two to three years—at most four—without encountering a crisis,” he said, pointing to the need for counter-cyclical policies that can cushion the economy during downturns and sustain growth during upswings.
Despite the challenges, Terkper indicated that there are early signs of recovery. He noted that Ghana is gradually regaining access to longer-term financing, with improved credit ratings and renewed confidence from international partners, including the IMF.
This, he said, is beginning to unlock funding for major initiatives such as infrastructure development and job creation programmes.
He cited ongoing efforts like Agenda 111 and the “Big Push” as examples of projects that are starting to take shape as fiscal space improves.
However, he was quick to caution that the recovery remains fragile and must be managed with strict discipline to avoid slipping back into economic distress.
Ultimately, Terkper’s assessment underscores a delicate reality: while Ghana may be climbing out of its recent economic downturn, it remains exposed to both global volatility and structural weaknesses at home. Without adequate buffers and forward-looking policies, the country risks being caught off guard once again when the next economic shock inevitably arrives.
