As Ghana emerges from the shadows of economic instability, former Finance Minister Mr. Seth Terkper has sounded a note of caution, warning against complacency amidst signs of progress.
Mr. Terkper’s remarks come as the nation embarks on a journey of recovery under the auspices of a US$3 billion loan-support program with the International Monetary Fund (IMF). In his recent statement, Mr. Terkper acknowledged the positive indicators emerging within Ghana’s economy, signaling a potential turnaround after years of fiscal challenges. However, he emphasized the importance of maintaining vigilance and avoiding the pitfalls of complacency.
“The signs of economic growth are indeed encouraging, but we must not allow ourselves to become complacent. The road to sustained recovery is fraught with challenges, and we must remain steadfast in our efforts to address them.”
Mr. Seth Terkper, former Finance Minister
One of the key focal points of Mr. Terkper’s analysis is the ongoing IMF loan-support program, which has provided a lifeline for Ghana’s economy during times of turbulence. While acknowledging the program’s role in stabilizing the nation’s finances, Mr. Terkper stressed the need for prudence in managing borrowed funds and ensuring that they are deployed effectively to drive long-term growth.
Mr. Terkper’s cautionary stance reflects a broader concern within Ghanaian economic circles regarding the sustainability of the nation’s recovery efforts. Despite the positive momentum, challenges such as debt sustainability, revenue mobilization, and structural reforms loom large on the horizon, requiring a concerted and strategic approach from policymakers.
“The IMF program has been instrumental in restoring confidence and stability, but we must exercise caution in our approach to borrowing. Sustainable economic growth requires not just access to funds, but judicious utilization and prudent management of resources.”
Mr. Seth Terkper, former Finance Minister
Mr Terkper, who is now the Executive Director of a consulting firm, Public Financial Management (PFM) Tax Africa Network, indicated that more ought to be done, especially on reducing the country’s expenditure and debt.
Mr Terkper further called for the setting up of a credible debt repayment system and a debt management office, which he said would be helpful in refinancing and reducing debt accumulation.
The former Finance Minister, Mr. Terkper, stressed that the urgency of this issue remains the same as it did in 2013–2014 when the government established the Sinking Fund. The government refinanced and established the Sinking Fund right away, which caused the rate of debt accumulation to begin to decrease. He emphasized, “You can never stop your debt from accruing if you don’t set aside money for it while you’re still growing.”
Mr Terkper revealed that ‘Zero Financing’ by the Bank of Ghana, a 2015 World Bank bond, a Treasury Single Account, and ESLA to pay off Independent Power Producers (IPP) debts, all helped to slow down debt accumulation.
Going forward, he called for more domestic tightening to reduce expenditure, noting that, “revenue is still stagnant though targets were exceeded last year. The significant levies we imposed did not bring in the necessary revenue boost.”
Regarding cost-cutting measures under the IMF programme to ensure fiscal consolidation, particularly in an election year, he urged the government to temporarily suspend some school and hospital projects.
To improve creditors’ and investors’ confidence in the economy, Mr. Terkper encouraged the Ministry of Finance to provide timely information on the country’s debt and arrears situation.
As Ghana navigates the complexities of its economic landscape, Mr. Terkper’s insights serve as a timely reminder of the importance of vigilance and foresight. While celebrating the strides made towards prosperity, the nation must remain vigilant against complacency, recognizing that the journey towards sustainable growth demands unwavering commitment and prudent stewardship of resources.
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