Reviewing Ghana's mid-year budget

Ghana's economy is facing a challenging period as Finance Minister Ken Ofori-Atta presented the country's half-year budget performance before parliament. John Gatsi, Dean of the University of Cape Coast School of Business, shared his insights on the key takeaways from the budget review. The focus of the presentation was on the review of the previous year, 2022, and the update on data. However, it appears that Ghana has not achieved significant progress, with most indicators falling short of expectations. The country is undergoing restructuring of its debt, with plans for a domestic and external debt exchange program to manage its debt more effectively. The government aims to adhere to the financial management act and ensure that debts are used for the intended purposes outlined in prospectuses and follow a framework for debt management. Ghana's debt remains high, at over 40 percent, indicating ongoing macroeconomic challenges. Despite securing an IMF deal, the country's currency has been volatile, with inflation pressures caused by both imported and domestic factors. Food prices have risen significantly, signaling the need for a revamp in the agricultural sector to reduce reliance on imports. Gatsi emphasized the importance of aligning agriculture, fiscal, and monetary policies to address inflation and exchange rate concerns effectively. He stressed that Ghana needs to boost domestic production to alleviate the pressure on imported goods. The challenge for monetary and fiscal authorities lies in balancing these economic dynamics to achieve stability. Gatsi expressed skepticism about a quick resolution, cautioning against overdependence on external assistance or fiscal policy interventions. The issue of political interference in economic affairs was also highlighted, with Gatsi pointing out the negative impact of such influence on institutions like the Bank of Ghana. Political interference has led to fiscal dominance, hampering effective monetary policy management and perpetuating economic challenges. Gatsi underscored the need for a stronger, independent central bank to address fiscal dominance and improve economic indicators. He criticized the government for prioritizing short-term electoral interests over long-term national development goals, urging a shift towards a more sustainable economic agenda. Overall, Ghana's economic landscape remains complex, requiring comprehensive reforms and a commitment to prudent economic governance to navigate current challenges and pave the way for future growth.