Ishamael Yamson, a former Unilever Board Chairman, has expressed shock at how Ghana’s economy which grew at 14.4 percent in 2011 could plummet so low within a spate of five years to record an estimated 3.3 percent growth in 2016.
Speaking to Joy Fm recently in Accra, Mr Yamson emphasized: “I just want to be very honest, this economy is…in a bad shape. If anybody tells you that there is anything to write home about, I would say just be cautious.”
‘Hot potato’ economy
Noting that Nana Addo-led New Patriotic Party (NPP) has inherited a ‘hot potato’, Mr Yamson said there was no other way to describe Ghana’s current economy except to say that times are bad.
He recounted how the country’s manufacturing sector declined by 1.1 percent to negatively affect players in the sector and by extension, the economy.
An economist with the University of Ghana, Dr. Eric Osei-Assibey, a panelist on the show, said two years into the International Monetary Fund (IMF)’s extended credit facility arrangement with Ghana, the challenges still remained.
The IMF deal, brokered by the John Mahama-led National Democratic Congress (NDC) administration, was aimed at reducing budget deficits, increasing revenue, checking public expenditure and improving exports as a way of strengthening the currency.
As an austerity programme, it was meant to restore debt sustainability and macroeconomic stability to foster a return to high growth and job creation through agriculture and infrastructure investment, while protecting social spending.
According to him, the inflation rate, which before the IMF programme was about 17 percent, is now 15.5 percent.
Ghana recorded a fiscal deficit of 6.3 percent in 2015 however in the second year of the programme, the deficit got more than 7 percent.
Dr Osei-Assibey added that the debt-to-GDP ratio of 72 percent was huge and raised serious challenges for the new managers of the economy.
“We pay so much in servicing debt. About a quarter of our expenditure is used in servicing debts,” he said.
While imports have reduced, exports have not improved in any significant measure, he said.
Although inflation rates have dropped to 15.5 percent, interest rates which ought to have registered a corresponding drop have “stubbornly remained very high,” Dr. Assibey observed.
He added that the interest rate has been hovering around 27 percent.
By Samuel Boadi