Policy think tank, Centre for Social Justice (CSJ) on Friday, July 12, 2024, held the 13th edition of its impactful Leadership Diagram Series (LDS), with top-notch economic recovery proposals for Ghana.

Themed "Ghana’s Economy from 2025 – 2028: The Hard Choices", the discussions at 'LDS 13' made insightful proposals for the next government on restoring Ghana's economy to winning ways.

Haruna Alhassan, a fellow of the finance pillar of the left-of-centre policy think tank, delivered a keynote address, stating that the next government would face an uphill task fixing the current economic challenges that have been characterised by unprecedented hardship.

"The road ahead will be tough. Tough, rough and bumpy," Alhassan warned, adding that from 2025, the ideal government for the country would be one led by an experienced person.

The experienced finance expert said tough collective actions have to be taken by the next government because it will be inheriting high cost of living, elevated unemployment levels, low accountability, high debt level, low fiscal space and a sluggish economy.

The hard choices

The Nana Akufo-Addo administration has attributed the current economic conundrum to the Russia-Ukraine war and Covid-19. However, Haruna Alhassan argues that factors such as the decision to spend GH¢339 million on the National Cathedral, a poorly executed financial sector clean-up and domestic debt exchange programme, the large size of government, and the central bank's financing of the government with GH¢40 billion provide a more comprehensive explanation for Ghana's economic challenges.

For the CSJ fellow, the first hard decision for the next government, if it is truly determined to fix the economy quickly, will be to move away from the making pomp and pageantry of its appointments. The next government must hit the grounding running.

"The time we spend forming a new government in Ghana [3 to 6 months] can be very long," he said. In my opinion, the new government should be ready before January 2025, and given the enormity of the situation, we really do not have time to waste."

CSJ's Leadership Dialogue Series, where Alhassan made his submissions, is the flagship civic education platform of the think tank. It aims to nurture mass political participation and patriotic values through stimulating discussions with experts and prominent national leaders.

According to Alhassan, the next administration must also prioritise stabilising the high cost of living by introducing policies that tackle food inflation. It can do this by making use of available arable lands, reviewing the taxes that hike price build-up for commodities like fuel, which directly impacts the cost of transport, and making accommodation cheaper.

"Look at how the cost of building is going up. You wonder how many Ghanaians can afford to continue to stay in decent accommodation, especially going into the future," he noted.

A second round of debt restructuring is imminent

Next, he wants the government that takes over from the current administration to tackle youth unemployment head-on, beat down corruption, encourage accountability, and take a second look at the current debt management regime.

On debt management, he said if the next administration fails to reverse the often-criticized "borrowing for consumption" and instead wisely invest monies borrowed, Ghana will perpetually be in bankruptcy.

"We may come out [of bankruptcy] temporarily because of the debt restructuring, but overall, we will still have a debt burden that we will struggle to pay. Going into 2025 to 2028, if you look at the payment profile of the restructured bonds, we cannot run away from having a second round of debt restructuring and it is important that we start that engagement right from 2025," he urged.

Bigger minimum capital requirement for Banks

Alhassan said the debt exchange and the depreciating currency have cut banks' capitals in a way that makes them unable to finance critical projects at a reasonable cost.

"With the current bank minimum capital, banks cannot finance impact-making projects on their own and sometimes even when they come together," he said.

The Bank of Ghana recapitalised banks to a minimum of GH¢400 million between 2018 and 2019. At the time, the GH¢400 million was equivalent to $100 million.

However, in current terms, due to the cedi depreciation, GH¢400 million is less than $40 million. Haruna Alhassan said the almost 60% loss in capital for banks spells trouble.

"For banks to be able to have that same strength as we envisaged in 2018 and 2019, we would need to look at raising the minimum capital requirements again," he stated.

He added that because some banks will struggle when a new minimum capital requirement regime is introduced, the Bank of Ghana must not introduce a "one-fit-all" capital requirement.

Ghana needs more than mere rhetoric

During the virtual event broadcast on Facebook, YouTube, and Zoom, a businesswoman, Georgina Danso also shared insights on how businesses are coping with the current economic climate and what the next government needs to do.

“The next government has its work cut out… It is no mean feat what they would have to deal with. What we generally need is a conducive business environment because the business community in Ghana has lost a lot of trust in the government,” she stated.

Danso also mentioned that the next government must inspire confidence through decisive actions rather than mere rhetoric.

The CSJ is a think tank and a platform for academics, activists and Ghanaian patriots aiming for greater social inclusion in the distribution of the wealth, privileges and opportunities for the society