The economy has shown signs of stability after years of turbulence, with a sharp cedi rebound, improved fiscal balances and easing inflation. But analysts warn the gains could be short-lived without tackling deeper structural weaknesses.<\/p>\n
A mid-year economic review by Emerging Markets (EM) Advisory described the cedi\u2019s 42.6 percent appreciation against the US dollar in first-half 2025 as \u201cgenuinely unprecedented\u201d in sub-Saharan Africa.<\/p>\n
The rally has almost reversed depreciation suffered between 2022 and 2024 \u2013 driven by IMF disbursements, surging gold prices and exports, rising remittances and central bank intervention.IMF disbursements<\/p>\n
However, EM Advisory cautioned that the underlying weaknesses \u2013 including productivity gaps, import dependence and fiscal pressures \u2013 remain unresolved.<\/p>\n
\u201cCurrency rallies can be fleeting,\u201d the report said. \u201cQuestions linger over how the economy will cope once gold prices normalise or the IMF programme ends.\u201d<\/p>\n
Fiscal performance in first-half of the year has been stronger than expected. Government posted a primary surplus of 1.1 percent of GDP, beating the 0.4 percent target, while expenditure was 14.3 percent below budget. Improved revenue mobilisation and spending restraint were credited for the outcome.IMF disbursements<\/p>\n
Still, the review flagged several challenges. Customs revenues fell short by GH\u20b51.6billion, partly due to a stronger cedi shrinking the local value of imports. The public wage bill overshot by GH\u20b51.3billion \u2013 reflecting late-2024 recruitment and persistent payroll inefficiencies, with thousands of unverified or ghost workers uncovered.<\/p>\n
Debt repayment obligations remain steep despite recent restructuring, with GH\u20b520billion due in 2026 and over GH\u20b550billion for 2027.<\/p>\n
On tax policy, recent VAT reforms aim to simplify the system, cut rates and reduce compliance burdens. The changes include abolishing the COVID-19 levy, removing the flat rate scheme and raising the registration threshold for small businesses. With VAT compliance estimated at just 20 percent, the review stressed that success will depend on enforcement, digital invoicing and targetted exemptions to avoid pushing activity into the informal sector.<\/p>\n
Government\u2019s arrears position also drew scrutiny. While it reported GH\u20b567billion in unpaid obligations inherited from December 2024, an ongoing audit has already rejected GH\u20b53.6billion and flagged GH\u20b527.3billion for validation. The IMF has suggested many claims may lack valid documentation, underscoring weaknesses in public financial management.IMF disbursements<\/p>\n
The report also highlighted capacity constraints in project delivery, citing cases of contractors drawing loans without completing works and persistent under-budgeting in the energy sector. These issues, it said, point to \u201ca deeper capacity deficit\u201d in the public service.<\/p>\n
In the banking sector, government\u2019s GH\u20b52.45billion recapitalisation of the National Investment Bank lifted its capital adequacy ratio from negative 53 percent to positive 23 percent, safeguarding deposits and jobs. But concerns remain about non-performing loans across the wider sector.<\/p>\n
Near-term risks include commodity price swings, a potential cedi reversal and fiscal pressures from political decisions. Medium-term challenges range from rising debt servicing to unresolved energy deficits and climate shocks to agriculture.<\/p>\n
\u201cStabilisation is not the same as transformation,\u201d the report said, urging government to strengthen the Sinking Fund, broaden the tax base and focus on high-impact, revenue-generating projects.<\/p>\n
Without deeper reform, it warned, the country risks sliding back into its \u201cfamiliar boom-bust cycle\u201d.<\/p>\n
Click here for source<\/p>\n","protected":false},"excerpt":{"rendered":"
The economy has shown signs of stability after years of turbulence, with a sharp cedi rebound, improved fiscal balances and easing inflation. But analysts warn the gains could be short-lived without tackling deeper structural weaknesses.<\/p>\n","protected":false},"author":8,"featured_media":13224,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_bbp_topic_count":0,"_bbp_reply_count":0,"_bbp_total_topic_count":0,"_bbp_total_reply_count":0,"_bbp_voice_count":0,"_bbp_anonymous_reply_count":0,"_bbp_topic_count_hidden":0,"_bbp_reply_count_hidden":0,"_bbp_forum_subforum_count":0,"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":[],"rop_publish_now_history":[],"rop_publish_now_status":"pending","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[153],"tags":[],"class_list":["post-13186","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-articles"],"jetpack-related-posts":[{"id":13194,"url":"https:\/\/gnbcc.net\/economic-recovery-holds-but-risks-linger-without-deeper-reform\/","url_meta":{"origin":13186,"position":0},"title":"Economic recovery holds, but risks linger without deeper reform","author":"Tracy Mensah","date":"August 15, 2025","format":false,"excerpt":"The economy has shown signs of stability after years of turbulence, with a sharp cedi rebound, improved fiscal balances and easing inflation. 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