Ghana’s economy weakened by Covid-19 crisis – World Bank
Ghana’s economy, the World Bank says, has been weakened by the Covid-19 pandemic.
Ghana’s economy prior to the pandemic was one of the fastest growing economies on the African Continent with growth averaging 7 percent a year.
On the onset of the pandemic, GDP growth fell significantly with Ghana recording a 0.4% GDP growth rate at end-2020 – recording its first quarterly recession in over 30 years in 2021.
The pandemic in addition to significantly lowering the country’s growth rate, resulted in the country recording higher fiscal deficits and increasing debt stock as government borrowed billons of dollars to fight the Covid pandemic and address its adverse impacts on the economy.
The higher debts and fiscal deficits coupled with the country’s inability to raise sufficient revenue to service its debts, has resulted in Ghana’s loss of market access to the international capital market and high yields on its bonds.
Given the weakened nature of the economy, the World Bank asserts that a strengthening of Ghana’s macroeconomic and fiscal framework is critical for a sustainable recovery from the pandemic.
According to the World Bank, the strengthening of the macroeconomic and fiscal framework will be needed to restore private sector confidence and underpin economic growth and poverty reduction.
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The World Bank is of the view that strengthening the macroeconomic and fiscal framework will require the implementation of key reforms to widen the tax base, strengthen tax administration, reduce tax exemptions, plug revenue loopholes and leakages, combat tax evasion and shore up debt sustainability.
“The Government also needs to continue efforts to strengthen control of statutory expenditures, carefully manage the phasing out of COVID-19 expenditures, reduce contingent liabilities arising from the energy and financial sectors as well as support a broad-based growth agenda with the explicit objective to foster the creation of quality jobs,” it added.
The Bank made the above observations in its approved $4.5bn Country Partnership Framework (CPF) report for Ghana.
The CPF estimated to last for five years – 2022 to 2026 – will prioritize investments in human capital, job creation, economic diversification, building a resilient health system and fostering a greener and more inclusive society.
The CPF will support Ghana in its COVID-19 and medium-term development agenda. It is designed around three mutually reinforcing focus areas, namely: Enhancing Conditions for Private Sector Development and Quality Job Creation; Improving Inclusive Service Delivery; and Promoting Resilient and Sustainable Development.
“The World Bank Group is happy to support Ghana’s economic recovery plan. The CPF is aligned with Ghana’s Coordinated Program of Economic and Social Development Policies and will support the Government of Ghana in creating a competitive environment for the private sector to flourish and play a greater role in job creation particularly for youth,” said Pierre Laporte, World Bank Country Director for Ghana, Liberia and Sierra Leone.
“The World Bank Group, through the CPF, will also support policies and programs that aim to strengthen digital transformation for improved service delivery and productivity, improve governance, and promote greater inclusion, including strengthening women’s economic empowerment,” he added.
The CPF will address the immediate as well as medium-term implications of the COVID-19 crisis in line with the Ghana Coronavirus Alleviation and Revitalization of Enterprises Support program and lay a path on how the World Bank, IFC, and MIGA, will leverage their relative strengths to partner with Ghana for stronger development outcomes.
