Ghana’s Finance Minister, Dr. Cassiel Ato Forson, has outlined key strategies for resetting the country’s economy, emphasizing the urgent need for reforms to drive sustainable growth.
Speaking at Ghana’s first National Economic Dialogue in over a decade, Dr. Forson addressed stakeholders on the structural weaknesses that have hindered economic progress and presented a framework for revitalization.
“The panel discussions, workshops and breakout sessions have been carefully designed to confront the pressing economic challenges of our time.
“The resultant prescriptions and critical policy initiatives will drive structural reforms and our transformation agenda to reset our economy and secure prosperity for our citizen”
Dr. Cassiel Ato Forson, Finance Minister
Ghana’s Growth
Ghana has experienced strong economic growth since the early 2000s, achieving middle-income status in 2011. Between 2008 and 2019, the economy expanded by an average of 6.8% annually, outperforming both regional and global averages, according to the minister.
Gross Domestic Product (GDP) per capita doubled over the period, averaging 3% growth per year. However, this growth was largely driven by oil and mining, sectors that generated wealth but did not translate into broad-based economic transformation.
“Despite our progress, the economy remains vulnerable due to its over-reliance on primary commodities. We must move beyond resource dependency to a productivity-driven growth model”
Dr. Cassiel Ato Forson, Finance Minister
The minister highlighted that Ghana’s economic structure has failed to support meaningful job creation and industrial diversification. While the agricultural sector still accounts for a significant portion of GDP and employment, productivity in manufacturing remains low.
Higher productivity sectors, such as mining and construction, contribute to economic growth but employ only a small segment of the workforce. This has led to an expansion of low-productivity services, such as retail trade and hospitality, which now make up a quarter of the labor force.
Stagnation
While Ghana’s per capita GDP has improved relative to Sub-Saharan Africa, it remains far below the levels necessary for “economic convergence with upper-middle-income countries”.
The gap between Ghana and advanced economies has widened significantly, and at current growth rates, it could take another 24 years to close the income difference.
Dr. Forson emphasized that economic growth has not been inclusive.
“Poverty reduction efforts have slowed significantly since 2012. Inflation and declining job opportunities in high-productivity sectors have reversed past gains, with the bottom 40% of the population seeing little to no improvement in living standards”
Dr. Cassiel Ato Forson, Finance Minister
The finance minister also pointed to the worsening inequality across regions. While urban poverty rates have declined, the absolute number of urban poor has remained high.
Rural areas, particularly in the northern regions, continue to experience severe poverty, with rates exceeding 50%.
Need for Structural Economic Reforms
Dr. Forson outlined the necessity of reorienting fiscal policy to support long-term economic transformation.
The government has identified “creating jobs for all, industrialization and business revitalization, infrastructure development and investing in human capital” as the four key pillars for economic recovery.
The first two would respectively focus on employment-intensive sectors such as agro-processing, manufacturing, and ICT, and supporting small and medium-sized enterprises (SMEs) to drive local production.
While the latter two would focus on enhancing road networks, digital infrastructure, and power supply to support businesses, and expanding education and healthcare access to build a skilled workforce.
He stressed that these reforms must be implemented urgently to sustain long-term economic growth.
“Without bold action, Ghana will only achieve upper-middle-income status after 2050. We must act now to reset our economic trajectory”
Dr. Cassiel Ato Forson, Finance Minister
Need for Discipline
One of the key hurdles to economic transformation is Ghana’s constrained fiscal space, where the government has limited resources to spend. Public spending has consistently outpaced GDP growth over the past decade, limiting the government’s ability to invest in productive sectors.
“Three major expenditure categories, public sector wages, interest payments, and earmarked funds, consume 70% of total government spending, leaving little room for capital investments”
Dr. Cassiel Ato Forson, Finance Minister
He criticized the inefficiencies in government spending, pointing out that while Ghana continues to initiate multiple projects, completion rates remain low.
For example, the Agenda 111 hospital project has seen over $400 million spent in the last four years without a single hospital becoming operational, while an additional $1.5 billion is required for completion.
“Infrastructure spending must be rationalized,” he added. “We cannot spread resources too thin across multiple projects without seeing tangible results.”
A Critical Weakness
Another major concern highlighted in the dialogue was Ghana’s poor revenue generation compared to its peers. In 2023, domestic revenue mobilization “stood at just 13.5% of GDP”, far below regional benchmarks.
Dr. Forson pointed out that tax collection remains “inefficient”, with numerous exemptions and a “complex tax structure” undermining revenue generation. The fiscal cost of tax expenditures, such as VAT exemptions and import duty waivers, is estimated at 3.9% of GDP.
“We must rethink tax policy to balance equity, simplicity, and efficiency. The current structure creates leakages and distorts market incentives”
Dr. Cassiel Ato Forson, Finance Minister
Institutional Reforms
Beyond revenue generation, the finance minister underscored the need for institutional reforms to ensure fiscal discipline.
Ghana’s Fiscal Responsibility Act, passed in 2018, has failed to contain debt accumulation due to weak enforcement mechanisms.
Additionally, inefficiencies in public financial management and procurement have worsened fiscal challenges.
“Commitment controls must be strengthened to maximize value for money and eliminate wasteful spending,” Dr. Forson noted.
To restore macroeconomic stability, the government will prioritize enhancing tax compliance and reducing exemptions, and implementing strict expenditure controls to prevent overspending.
Government will also improve the efficiency of social programs and public infrastructure investments, and phase out costly and ineffective subsidies while increasing targeted social programs.
State-owned enterprises (SOEs) will also undergo reforms to minimize fiscal risks.
The Path Forward
Ghana’s macroeconomic situation remains fragile, but Dr. Forson expressed optimism that with “decisive reforms, the country can reset its economy and build a more resilient future.”
“The next four years will be critical in determining Ghana’s economic trajectory. We have a unique opportunity to make the necessary structural adjustments and put the country on a sustainable growth path”
Dr. Cassiel Ato Forson, Finance Minister
In light of the minister’s address, stakeholders are now looking forward to the 2025 budget reading on Tuesday 11th March, to fully comprehend the finer details of the new fiscal journey the government has set the country on for prosperity.
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