Prof Godfred Bokpin is an economist
An economist, Professor Godfred Bokpin, has backed the World Bank’s assertions that Ghana’s 2022 economic crisis was the result of years of poor fiscal management, rather than external shocks.
According to him, the meltdown was “an accident waiting to happen”.
“The World Bank is right. COVID-19 did not initiate Ghana’s economic vulnerability. It only magnified it. The real cracks were already visible by the third quarter of 2021,” he said, according to a myjoyonline.com report.
According to him, when investors shut Ghana out of the international capital markets in 2021 after spotting deep weaknesses in the economy, it was the moment the cracks in the economy appeared.
Ghana’s economic crisis was homegrown, not caused by Covid or Ukraine war – World Bank
“By 2019, the government’s own debt sustainability analysis showed nearly all indicators had been breached. Yet debts taken by state enterprises such as Cocobod were kept off the books to create a false impression of stability,” he explained.
Prof Bokpin pointed to the central bank’s extraordinary financing of government operations after Ghana lost market access.
He disclosed that the Bank of Ghana printed more than GH¢40 billion, with the government’s exposure to the bank eventually hitting GH¢77.6 billion, an amount that later had to be restructured.
By the time the IMF stepped in, Ghana’s debt-to-GDP ratio had soared to 109% in present value terms, while the debt service-to-revenue ratio had climbed to between 22% and 25%, well above the 18% sustainability threshold.
“Once we lost market access, we were exposed both internationally and domestically. We were priced out of long-term borrowing and forced to rely on short-term treasury bills,” he said.
For Prof Bokpin, the 2022 collapse was not the fault of COVID-19 or the Russia-Ukraine War.
Instead, he said it reflected years of fiscal indiscipline, poor debt management, and a lack of accountability.
“It is not necessarily COVID that exposed us. We had created this ourselves, and it was only a matter of time,” he stressed.
SSD/AE
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