John Dramani Mahama’s first-year address to the nation, themed “From Crisis Declaration to Recovery Narrative – Assessing the Mahama Administration at Year One,” was both a candid admission of economic distress and a confident projection of recovery. In a speech that echoed the transformational ambition often associated with Kwame Nkrumah, the President outlined the depth of Ghana’s fiscal challenges while presenting an agenda aimed at structural reform, macroeconomic stability, and long-term growth.
At the heart of the address was the acknowledgment that Ghana’s economy remains in “dire straits.” Public debt stands at GHS 721 billion, with debt servicing between 2025 and 2028 projected at GHS 280 billion—GHS 150 billion domestic and GHS 130 billion external. While the cedi depreciated by 19% in 2024 (after 27.8% in 2023), recent appreciation of over 40% signals tentative stabilization. However, buffers remain thin: the Sinking Fund reportedly holds just $64,000 and GHS 143 million. Additionally, 55 stalled projects due to debt restructuring have left US$ 2.95 billion undisbursed, with cost overruns expected to reach GHS 15 billion.
Policy Suggestion: Fiscal consolidation must move beyond debt restructuring toward expenditure rationalization and revenue enhancement. Ghana should adopt a legally binding fiscal rule anchored on debt-to-GDP reduction targets, strengthen the Ghana Revenue Authority (GRA) through digital tax compliance systems, and aggressively widen the tax net, particularly within the informal sector. Public investment management reforms are also critical to prevent future cost overruns.
The President highlighted commitment to have a lean government machinery, cutting ministers and deputy ministers to 60, currently standing at 58, and maintaining a leaner presidential staff. These measures are symbolically important in restoring public confidence.
Policy Suggestion: Government efficiency should extend to performance-based budgeting across ministries. Linking budget allocations to measurable outcomes, especially in infrastructure, health, and education, would enhance accountability and value for money.
The cocoa sector presents one of the most alarming fiscal exposures. COCOBOD’s debt has reached GHS 32.5 billion, with GHS 9.7 billion due by September 2025. Contract rollover losses are staggering: 333,767 tonnes were rolled over at prices far below current global rates, resulting in losses exceeding US$ 840 million already, with an additional US$ 495 million anticipated. Cocoa road commitments amount to GHS 21.7 billion, much of which is not fully captured in debt figures.
Policy Suggestion: Ghana must reform cocoa marketing and hedging strategies. Greater transparency in forward sales contracts and partial liberalization of the sector could reduce fiscal risk. Diversifying into value addition, processing cocoa into finished products locally, would also shield the economy from volatile commodity price swings. The move by government to process 50% of cocoa beans locally is a way to adding and capturing value from the sector ultimately increasing government revenue from the sector
In the energy sector, described as the engine of growth, total debt stands at GHS 70 billion, with a 2025 financing shortfall of US$ 2.2 billion. Despite over GHS 45 billion collected under The Energy Sector Levies Act (ESLA), 2015 (Act 899), ECG alone owes GHS 68 billion. Planned reforms include a single revenue (ESLA) collection account and strict enforcement of the Cash Waterfall Mechanism, alongside private sector partnerships such as the ECG-Enclave Power pilot, which boasts 99% revenue collection.
Policy Suggestion: The energy sector requires deep structural reform. Full metering, cut transmission and distribution losses, and concession-based management models could improve efficiency. Government must also ensure transparency in ESLA fund utilization and prioritize renewable energy investments to reduce long-term generation costs. The 5% increase in renewable energy within the national energy mix is a significant step that will help reduce generation costs associated with fossil fuels. Globally, renewable energy prices continue to decline and are increasingly more competitive than fossil-based generation. Independent Power Producers (IPPs) should therefore be required to incorporate renewable energy into their generation portfolios as a condition for government fuel supply contracts. This approach will support the achievement of national renewable energy targets while strengthening energy sustainability.
Encouragingly, some IPPs have already begun diversifying into renewables. Sunon Asogli, for example, has secured land in northern Ghana to develop a solar power project. With Africa holding about 60% of the world’s solar potential, Ghana must strategically harness this abundant natural resource to drive long-term socioeconomic development.
The financial sector continues to recover from the costly clean-up, which has taken about GHS 29.9 billion. The Domestic Debt Exchange Programme (DDEP), described as the most distressing policy in the Fourth Republic, has begun to yield stability, with Treasury bill rates declining. The cost of obtaining capital has fallen as Bank of Ghana (BoG) has cut down both the policy and the reference rates making capita affordable both business and individual to acquire for capital for business development.
Policy Suggestion: Restoring investor confidence demands consistent macroeconomic policy and strong regulatory oversight. Capital market development, particularly corporate bond markets, could ease pressure on domestic borrowing. Thus, the Bank of Ghana (BoG) must continue to provide strong oversight to consolidate these gains, especially as international rating agencies have upgraded Ghana’s outlook, boosting investor confidence in the economy. The core strategy, largely anchored on the Ghana Accelerated National Reserve Accumulation Policy (GANRAP) initiated in 2026, seeks to raise international reserves to 15 months of import cover by the end of 2028, supported by recent increases in gold prices. This will strengthen the cedi against major trading currencies, reduce excessive volatility, and enhance the economy’s resilience to external shocks.
Agriculture remains a critical opportunity. Ghana’s food import bill exceeds US$ 2 billion annually, with poultry imports accounting for 95% of consumption. New initiatives such as the Agriculture for Economic Transformation Agenda (AETA), Feed Ghana Programme, Nkoko Nkitinkiti project, and AgriNext Programme aim to boost domestic production and youth participation.
Consequently, an estimated 34–35% of our GDP is driven by imports. This level of import dependence is unsustainable and exposes the economy to external vulnerabilities. We must strategically reduce this figure to about one-tenth over time by deliberately promoting import-substitution industries. By strengthening domestic production capacity in key sectors, Ghana can build a more self-sustaining, resilient, and job-creating economy.
Policy Suggestion: Government should prioritize irrigation infrastructure, warehouse receipt systems, and agro-processing zones. Linking smallholder farmers to guaranteed off-take markets, including school feeding and public procurement, would stimulate rural incomes and reduce imports sustainably. The Ministry must initiate practical and targeted measures to reduce Ghana’s import bill, particularly for basic commodities such as eggs, tomatoes, and other essential food items that can be competitively produced locally. The continued importation of such products places unnecessary pressure on foreign exchange reserves and weakens domestic production capacity.
As a nation, we should set a clear and measurable target to reduce the import bill to a sustainable threshold—ideally to about 10% of GDP over the medium term. Establishing such a benchmark would provide policy direction, enhance accountability, and guide investment toward strategic import substitution.
Admittedly, Ghana cannot and should not aim to produce everything it consumes. The principle of comparative advantage remains central to international trade; certain goods will always be more efficiently produced elsewhere. However, where the country possesses the natural resources, climate conditions, and human capital to produce competitively, deliberate policy support, through improved irrigation, access to credit, storage facilities, value-chain development, and market linkages, can significantly reduce avoidable imports.
The goal, therefore, is not economic isolation, but strategic self-sufficiency in key sectors. By strengthening domestic production in areas where we hold clear potential, Ghana can stabilize its currency, create jobs, enhance food security, and build a more resilient economy.
In the petroleum sector, crude production has declined by 32%, and investor exit threatens upstream activity. Revitalizing the Sekondi-Takoradi enclave and securing new investment commitments are central to reversing this trend. The upstream sector is a source of revenue to the state and measures must be in place to ensure enough revenue is generated for national development.
Policy Suggestion: Competitive fiscal terms, regulatory certainty, and expedited licensing rounds are essential to attract fresh capital. Simultaneously, Ghana must accelerate gas utilization to reduce reliance on crude oil for power generation. Exploration and exploitation in the Voltaian Basin and other prospective basins must continue to drive new discoveries and boost upstream petroleum output. Sustained investment, supportive policies, and regulatory stability are essential to attract investors and reverse declining production.
The IMF programme remains pivotal. Key milestones include the National Economic Dialogue, budget presentation, and IMF review in April 2025. Ghana has honored DDEP coupon payments totaling over GHS 9.5 billion in February 2025, signaling commitment to reform.
Beyond stabilization, the President announced bold initiatives: a 24-Hour Economy policy, a US$ 10 billion “Big Push” infrastructure drive, tax rationalization, and a Renewable Energy and Green Transition Fund. These policies aim to catalyze productivity, industrialization, and sustainable growth.
Ultimately, Ghana’s recovery hinges on policy credibility, institutional reform, and disciplined implementation. The administration’s ambition is clear. As President Mahama declared, “I, John Dramani Mahama, will fix the economic crisis confronting our country and reset it on a path of growth and prosperity.” Translating that pledge into measurable outcomes will define not only this president Mahama but Ghana’s economic trajectory for decades to come.
By Dr. David Alemzero
PhD,MSc, BSc
Coordinator Social Science
Programmes
Accra Metropolitan University (Accra Met).
Email. david.alemzero@accramet.edu.gh
