Founding President of the IMANI Centre for Policy and Education, Franklin Cudjoe, has argued that Ghana’s economy is strong enough to absorb possible shocks arising from an escalating conflict involving the United States, Israel, and Iran.
According to him, fears that such a war could plunge the country into a severe economic crisis may be exaggerated. In a commentary on the subject, Mr Cudjoe observed that some political opponents appear hopeful that the economic consequences of tensions in the Middle East will negatively affect Ghana.
However, he insisted that the country’s current economic situation is significantly different from what existed when the global economy was disrupted by the Russian invasion of Ukraine.
“I see many of our compatriots in the opposition are happy and prayerfully nursing thoughts that all doom emanating from Iran war will put Ghana in a serious economic bind. Truth be told, unless the war prolongs beyond a year, Ghana might not be that terribly hit as happened under the last government.”
Founding President of the IMANI Centre for Policy and Education, Franklin Cudjoe
Lessons From the Russia Ukraine War
Mr Cudjoe explained that the economic difficulties Ghana experienced during the Russia Ukraine conflict were largely due to internal weaknesses rather than the war itself.
He recalled that the finance minister at the time admitted that the global crisis only exposed serious structural problems already present within Ghana’s economy.
He pointed to several vulnerabilities that worsened the country’s economic condition during that period. Inflation had reached about 54 percent while interest rates were approaching 45 percent.
At the same time, the foreign exchange system had virtually collapsed, leading to a sharp depreciation of the Ghana cedi against major international currencies.
The IMANI boss also cited the country’s heavy public debt burden and difficulties in servicing those obligations. Rising fuel prices and a number of controversial public expenditures further increased the strain on the national economy.
Among the examples he mentioned were expensive projects and spending decisions that he said placed unnecessary pressure on public finances. These included the construction of the national cathedral and other projects that attracted criticism over alleged procurement irregularities.
Improved Economic Fundamentals
Mr Cudjoe stressed that Ghana’s present economic indicators are far more stable than they were during the earlier crisis. He noted that several key economic fundamentals have improved considerably.
“Most of our underlying economic conditions are not that terrifyingly crazy. Inflation is less than four percent. Our debt has been reduced from junk status to a respectable one. Debt to GDP dropped from sixty-two percent to forty five percent last year.”
Founding President of the IMANI Centre for Policy and Education, Franklin Cudjoe
He added that commercial bank lending rates have declined significantly and now average less than twenty percent. This reduction, he said, provides a more supportive environment for businesses and economic activity.
Another major improvement he highlighted is the performance of the Ghanaian currency. According to Cudjoe, the cedi has appreciated by an average of about thirty percent against major global currencies, a development he attributes partly to stronger fiscal discipline and improved economic management.
He also reminded observers that the Russia Ukraine war is still ongoing, yet Ghana’s economy has stabilized despite the continued global uncertainty.
“Please remember to say to those who wish to draw parallels with the Russia Ukraine war today that most of our underlying economic conditions are not that terrifyingly crazy,” he emphasized, repeating the improvements in inflation, debt levels, interest rates, and the exchange rate.
Calls for Energy Security Measures
Despite his optimism about Ghana’s economic resilience, Mr Cudjoe urged authorities to take proactive steps to protect the country against possible disruptions in global energy supply.
He suggested stronger private sector participation in the management of the Tema Oil Refinery and the Bulk Oil Storage and Transportation Company. According to him, such collaboration could help Ghana build sufficient crude oil reserves to cushion the country during global crises.
Mr. Cudjoe cited figures from the National Petroleum Authority indicating that Ghana currently has petroleum products that could last for about five weeks. While this offers some buffer, he warned that it may not be sufficient if international supply chains are disrupted for an extended period.
To strengthen energy security, the IMANI Founding President proposed exploring new arrangements that would allow Ghana to refine more of its own crude oil locally.
He suggested that the government could adjust fiscal rules to take a portion of crude produced in Ghana and refine it domestically for national consumption. This could involve crude supplied by partners operating in the Jubilee Oil Field.
Under such a framework, Ghana would compensate the developers while ensuring that the country maintains reliable access to refined petroleum products. Mr Cudjoe believes that such measures will help reduce Ghana’s reliance on imported fuel and enhance the country’s ability to withstand external economic shocks caused by geopolitical conflicts.
READ ALSO: Ghana Debt Market Faces Refinancing Shock
