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Ghana’s economic outlook amidst mounting debt, excessive taxation, and currency volatility. Analysis of challenges and expectations for sustainable solutions.
Ghana’s outlook for 2025, remains challenging, particularly as the country begins repaying its external debts, giving that this particularly poses a major challenge for businesses, citing economic instability, unemployment, poverty, high taxation, currency fluctuations, and rising public debt as key components that stands to derail the little progresses made if structures are not put in place to curb them.
Dr. M.C Vasnani
President, Ghanaian-German Economic Association
The world all over is bracing for a potential shift in the global financial and economic scales, as world trade giants like United States of America, China, Canada, Germany among others come head to head for economic supremacy, albeit the imposition of taxes on Canada by USA and vice versa, the Ghanaian government has been tasked to strengthen its domestic financial markets way in time before seeking to contract International Capital as a means of shoring up domestic bonds. This according to the country’s local and international stakeholders is to ensure that the country is prepared to support home-grown economic initiatives, financial policies and reforms especially following the country’s recent poor performance on the global markets. This among others were the main highlights of the recently held high-level economic forum organized by the Ghana-German Economic Association (GGEA) at the Lancaster Accra Hotel, where key stakeholders met to discuss the country’s fiscal policies, investment climate, and economic reforms for 2025. The high profiled event was attended by the President of the Ghanaian German Economic Association (GGEA) Dr. M.C Vasnani, Ambassador of the Federal Republic of Germany H.E Daniel Krull, Economist and Professor of Finance at the University of Ghana, Godfrey A. Bokpin and the Presidential Advisor on the Economy Hon. Seth E. Terkper.
As stakeholders gathered to discuss the country’s economic status and device means of making things right, Dr. Vasnani noted that Ghana’s outlook for 2025, remains challenging, particularly as the country begins repaying its external debts, given that this particularly poses a major challenge for businesses, citing economic instability, unemployment, poverty, high taxation, currency fluctuations, and rising public debt as key components that stand to derail the little progresses made if structures are not put in place to curb them. Dr. Vasnani urged businesses to prepare for potential shifts in government policies and global economic trends.
….In brief, Ghana’s economic outlook for 2025 is quite challenging with the start of the payment of our external debts. Businesses operating in Ghana should be aware of the challenges and the risks associated with the country’s economic environment…
Dr. Vasnani further pointed that Ghana’s economy has in recent past been experiencing fluctuations, a situation which has direly affected the everyday tax payers negatively, not sparing small scale businesses taking the hardest hit. He stressed that urgent steps need to be made in desperate attempt to revert the effect of the aforementioned challenges, if government seeks to improve the economy, increase youth employment as well as open the trust doors for foreign investors.
“…..Ghana’s economy has experienced fluctuation in the past and businesses should be prepared for potential changes in government policies and global economic trends….We need to ensure a stable financial market domestically before turning to international capital markets. Strengthening our tax compliance measures and managing public debt prudently are critical to restoring investor confidence… Ghana’s unemployment rate remains a concern and businesses should consider strategies to create jobs and stimulate economic growth…”
Tax Reforms and Revenue Mobilization
Prof. Godfred Bokpin in his submission pinned the relevance of broadening the tax net rather than increasing tax rates. Prof. Bokpin highlighted that Ghana has consistently tried to widen its tax base, however, the prevalence of inefficiencies has stalled the progress intended. He advocated for a simplified tax system that encourages compliance, pointing that records exists to prove that reducing tax rates can sometimes lead to increased revenue collection.
“…….In 2017, the government removed about 15 taxes, yet revenue as a percentage of GDP increased due to improved compliance. However, after COVID-19, we reversed this approach and imposed more taxes, leading to lower compliance…”
Prof. Bokpin echoed that the country could generate significant revenue by enhancing compliance and digitizing tax collection processes, stressing that tax compliance should be mandatory for certain class of professionals such as lawyers, engineers, and accountants, suggesting that individuals should not be allowed to renew their licenses without proof of tax payments.
