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.
A mid-year economic review by Emerging Markets (EM) Advisory described the cedi’s 42.6 percent appreciation against the US dollar in the first half of 2025 as “genuinely unprecedented” in sub-Saharan Africa.
The rally has almost reversed the depreciation suffered between 2022 and 2024 – driven by IMF disbursements, surging gold prices and exports, rising remittances, and central bank intervention.
However, EM Advisory cautioned that the underlying weaknesses – including productivity gaps, import dependence, and fiscal pressures – remain unresolved.
“Currency rallies can be fleeting,” the report said. “Questions linger over how the economy will cope once gold prices normalise or the IMF programme ends.”
Fiscal performance in the 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.
Still, the review flagged several challenges. Customs revenues fell short by GH₵1.6 billion, partly due to a stronger cedi shrinking the local value of imports. The public wage bill overshot by GH₵1.3 billion – reflecting late-2024 recruitment and persistent payroll inefficiencies, with thousands of unverified or ghost workers uncovered.
Debt repayment obligations remain steep despite recent restructuring, with GH₵20 billion due in 2026 and over GH₵50 billion for 2027.
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 targeted exemptions to avoid pushing activity into the informal sector.
Government’s arrears position also drew scrutiny. While it reported GH₵67 billion in unpaid obligations inherited from December 2024, an ongoing audit has already rejected GH₵3.6 billion and flagged GH₵27.3 billion for validation. The IMF has suggested many claims may lack valid documentation, underscoring weaknesses in public financial management.
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 “a deeper capacity deficit” in the public service.
In the banking sector, government’s GH₵2.45 billion 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.
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.
“Stabilisation is not the same as transformation,” the report said, urging government to strengthen the Sinking Fund, broaden the tax base, and focus on high-impact, revenue-generating projects.
Without deeper reform, it warned, the country risks sliding back into its “familiar boom-bust cycle.”
