Former Finance Minister and economic advisor to President John Mahama, Seth Terkper, has cautioned that Ghana’s current economic stability may not last.
Speaking on Joynews, he urged the government to prepare for future crises by building financial buffers.
“Stability is not forever,” Mr. Terkper warned. “You cannot manage an economy continuously for four years without one crisis or the other.”
His remarks support President Mahama’s cautious stance, emphasizing the need to save despite signs of macroeconomic calm. “President John Mahama is saying things are going well, but let’s be careful,” he stressed. “Let’s make sure that when the trend starts to reverse, we have reserves.”
Mr. Terkper described these reserves as a necessary sacrifice for long-term economic security. “To set reserves, as in households, as in businesses, is sacrifice,” he explained. “When the chips are down, we must fall on them to stabilise the situation.” He argued that stability must be sustained through preparation for economic shocks. “It’s good to stabilise, but it is better to sustain.”
The former minister also addressed concerns about Ghana’s revenue outlook following the suspension of certain import levies.
He acknowledged that Ghana’s tax-to-GDP ratio remains relatively low at 15%, stating, “Even for an African country, it should be 17%, 18%.” He stressed the importance of reinstating an efficient VAT regime to strengthen revenue generation.
Drawing lessons from past economic measures, Mr. Terkper pointed out that Ghana has historically employed temporary levies during financial hardship. “We have had a temporary levy policy. You use them during austerity, and then you remove them. They are similar to counter-cyclical measures.”
Using COVID-19 as an example, he explained how certain industries flourished during the pandemic, leading to the introduction of financial sector levies. “When we went into COVID globally, remember that’s when Zoom, telephony, and things hit a boom. Many of these were done through the banking sector. That’s when you got your Financial Sector Levy.”
He advised that Ghana should prepare for future crises, such as Mpox, by ensuring adequate reserves are set aside. “Have we put some reserves aside, learning from COVID? So that when Mpox comes, we fall on those reserves to manage?”
Ending on a reflective note, Mr. Terkper emphasized that economic shocks are inevitable, but the key lies in preparedness. “You cannot manage an economy without a crisis. The question is whether you are ready when it comes.”
