A Resurgent Ghanaian Economy: The Ato Forson Effect or Pure Coincidence

John C. Maxwell once remarked that, “a leader is one who knows the way, goes the way and shows the way.” This kind of leadership as envisioned by Maxwell is the kind a nation such as ours, where matters of the economy become a mere sermon in the mouth of academics and politicians as against the expectation of the people who are concerned about the realities of their daily life.

Ghana, an import-driven economy crumbled in the past few years in such horrific manner that left many people wondering as to what striking blow could cause the instant collapse of an elephant economy of such magnitude almost overnight. Political actors traded accusations, each blaming the other and attributing the predicament to the widespread corruption and economic mismanagement.
Yet within eleven months into a new administration, a renewed sense of hope has emerged. The once junk rated Ghanaian economy is regaining global admiration with moody’s rating raising ghana’s sovereign credit from caa1 to caa2 with positive outlook. S& P Global Rating followed suit raising the country’s sovereign credit rating from CCC+/C to B-/B citing strong fiscal and external performances.The IMF now projects Ghana’s debt to GDP ratio to fall to to 59.1% by the end of 2025, down from a staggering 92.4% in 2022.

Gross International Reserves( GIR) stand at 4.5 months of import cover and the Bank of Ghana at the same period accumulated 38.04 tonnes of gold reserves, an increase of 35% from the previous years. Thanks to an excellent debt restructuring policies and massive fiscal discipline. The Ghana cedi, once severely weakened is now doing well in the foreign exchange market appreciating raidly against major trading currencies: 10.85 to the dollar, 15.5 to the pound and 12.52 to the euro. Inflation has cooled to a single digit of 8.00% as at October and projected to further decline at 6.5% by the end of the fiscal year, a figure never seen in the books of statisticians for a long time.
For a nation that only recently endured the severe consequences of hair cut, pension funds locked up, and retirees could barely meet their medication needs, business clossures resulting from depletion of capital stock due to extremely weakened cedi and inflation figures rivaling exam scores,etc, this rcent economic turnaround feels almost miraculous. All economic indicators were out of shape that in 2023, a Kenya tour guide asked me what happened to “the Black Star of Africa,” a question many Ghanaians were asking themselves.
Economists maintained that the economic collapsed could largely have been avoided. While COVID-19 disrupted global economies, Ghana’s decline was disproportionately severe. Neighbouring countries with fewer economic buffers weathered the storm better. The reason? The political class exploited the crisis to plunder the public purse. Essential goods and services oversight agencies were mired in corruption with CEOs daringly amasing generational wealth, directly taking public funds to engage in private investment.
In the heat of a pre-election enviroment, the 2020 general election, government overspending led to a record 15.2% budget deficit. Again, the uncontrolled expenditure and leakages caused exess liquidity which flooded the economy, triggering demand-pull inflation. As a matter of fact the economy was overheated. Increased appetite for luxury imports created unsustainable demand for foreign currency coupled with overwelmingly weak export performance. Gold and cocoa, the nations major foreign exchange earners, underperformed. Emegerncy tax measures and the gold-for-oil initiatives failed largely due to persistent corruption.
The real turnaround began when the new government came to power with solid foreign exchange policies to restore the value of the cedi. The establishment of the Goldbod initiative ensured that gold exports brought much needed dollars back to the Bank of Ghana. Dollar auctions stabilized the forex market by providing local banks with enough support to meet demand by traders. The government also aggressively pursued a sterilisation policy to remove excess cash in the system. This coupled with tight monetary stance and moderate public spending reinforced confidence. Despite missing Treasury Bill coupon targets, the government maintained low interest rate rumuored to have required ministries and agencies to tighted their expenditure for the greater good. The unmet revenue projections in the 2025 fiscal year budget was positively responded by the ministry of finance through cut down in disbursements. The cascading effect is a resurging economy and a stable exchange rate.
As bell hooks asserts,”Give credit where it is due.” Whether coincidence or competence, the facts remains: Hon. Dr. Ato forson and his team have deliverd where others have failed. Their displine and pragmatism deserve recognition.
The 2026 Budget is pregnant with good policies that promise to maintain the momemtum. Such policies as The big Push, the 24-Hour Economy and other bold initiatives combined with H.E Preident Mahama’s strict stance on intergrity and prudent management,with a warning to his appoitees, “ Woe betides anyone who will bring corruption scandal to this government” signaled a renewed comitment to responsible governace. May the government continue to pursue austere yet prudent economic management approach, build stronger economic buffers and consolidate the gains made so far.
Atanga Mathew (0245866863)
(B.Ed economics, LLB( Hons), LLM Candidate.)