Professor Stephen Adei, an economist and former Board Chairman of the Ghana Revenue Authority (GRA), has debunked assertions that Ghana’s economy is on the verge of collapsing.
Speaking in an interview on JoyNews’ Upfront, he said the economy is not collapsing but “we are in difficult times.”
According to him, the country’s economy is stronger “than the word broke.”
Prof. Godfred Alufar Bokpin, an economist at the University of Ghana Business School (UGBS), recently warned of the possibility of Ghana’s economy collapsing.
Prof. Bokpin underlined on the Super Morning Show that the current debt issue could get worse by the end of September if adequate interventions are not undertaken, as the country’s debt stock reaches high distress levels.
Meanwhile, Ghana’s current public debt stock is astonishing, at 341.8 billion Ghana cedis, with a debt-to-GDP ratio of more than 77 percent as of September 2021.
This indicates that if the country’s 30.8 million people had to divide this amount, everyone would owe around 11,000 Ghana cedis.
Ghana has spent an average of 147 billion Ghana cedis on interest payments on its borrowings, which is 47 billion Ghana cedis more than our estimated revenue plus grants for 2022.
Prof Adei suggested that the country’s expenditure be cut in light of the country’s debt stock.
“If you are exceeding your income, then you must accept to live below your income, which is the easy way, otherwise if you are earning GHC3,000 and you are in debt of GHC10,000 you cannot day to day spend GHC3,000. For you to get out of the rag you will have to cut your expenditure to GHC2,000 because you must service your debt. So we are in that situation as a country,” he said.
He explained that although cutting of expenditure might be difficult for the government, especially nearing an election period, that is the right way to go.
“…And they [government] must thank God that this crisis has come now and not 2023, because if they don’t go for the hard one now, which normally will take about 18 months to go over this type of hunch, then they have a good chance by the middle of 2023 to see some good results in 2024. If not, things would get worse and they want to prevent being thrown out of government, they would be thrown out anyway,” he said