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What Will Happen to Ghana's Economy in Two Years?

16:13, 21 July 2023

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Rasina Musallimova

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It has been recently announced that a memorandum of understanding between the Ghana-Russia Business Development Council and the Russian Export Center is planned to be signed at the Russia–Africa Summit, which will be held on July 27-28 in St. Petersburg, according to officials.

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Ghana is due to regain economic growth by 2025, according to a recent World Bank report. The annual analytical report on the perspectives of Ghana's economy was conducted by three experts of the organization.

"Growth will further decelerate in the short term (2023-24) before returning to its potential after 2025," according to the document.

After COVID-19, Ghana's economy growth rates leaped from 0.5% to 5.3% in 2021. However, a sharp decrease to 3.1% was registered in 2022.

"In 2022, a combination of pre-existing imbalances and external shocks brought Ghana into a deep macroeconomic crisis," the report said.

This year, the country's economy is expected to slow to 1.4% and recover to 3% in 2024.

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It is also noted in the report that weak revenue performance and a surge in expenditure aggravated the country's growing public debt, which increased to around $347 billion. This is more than 70% above the internationally accepted threshold of its Gross Domestic Product.

In addition, a number of recommendations for the improvement of the economic situation have been made.

"The government should support well-targeted investments to create jobs, lower income inequality and boost productivity, prioritize investment in agricultural research and development and green innovations," the report stated.

Earlier, Ghanaian President Nana Akufo-Addo said that economic difficulties Ghana faced in recent years, stem from the downgrading of the country's economy by rating agencies.

The West African leader said that being "the AU [African Union] champion for African financial institutions and leader of a country that recently had to deal with one of the most difficult periods in [its] post-independent history, difficulties that were exacerbated by the reckless behavior of rating agencies that engaged in pro-cyclical downgrades that shut Ghana out of the capital market and turned a liquidity crisis into a solvency crisis."

The leader also underlined that it is essential for Africa to establish its own financial institutions in order to liberate itself from foreign terms that hinder African development.

"Unless we have strong financial institutions, we are not going to develop. We have learnt over the decades that relying on foreign capital is both risky and costly. It has resulted in huge financial leakages to a high cost of default-driven borrowing rates and interest payments and undermines the growth of our financial institutions," the president stated.