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President Mahama Outlines Year-One Economic Recovery Plan Amid Fiscal Challenges

In his first-year address to the nation, titled “From Crisis Declaration to Recovery Narrative – Assessing the Mahama Administration at Year One,” President John Dramani Mahama presented a candid overview of Ghana’s economic hardships while setting out a roadmap for recovery. The speech, echoing the transformative vision often associated with Kwame Nkrumah, balanced an honest acknowledgment of fiscal distress with a forward-looking agenda for structural reform, macroeconomic stability, and long-term growth.

Economic Reality and Debt Pressures
President Mahama acknowledged that Ghana’s economy remains in “dire straits.” Public debt has reached GHS 721 billion, with debt servicing from 2025 to 2028 projected at GHS 280 billion—GHS 150 billion domestic and GHS 130 billion external. While the cedi depreciated by 19% in 2024, following a 27.8% fall in 2023, a recent appreciation of over 40% points to tentative stabilization.

However, buffers remain thin: the Sinking Fund holds just $64,000 and GHS 143 million. Additionally, 55 stalled projects tied to debt restructuring have left US$ 2.95 billion undisbursed, with cost overruns expected to reach GHS 15 billion.

Policy experts suggest Ghana must go beyond debt restructuring to rationalize expenditures, enhance revenue, and implement legally binding fiscal rules tied to debt-to-GDP reduction. Strengthening digital tax compliance and widening the tax net—particularly in the informal sector—are seen as key steps.

Government Efficiency Measures
Mahama also committed to a leaner government structure, reducing ministers and deputies to 60, with 58 currently in office, while trimming presidential staff. These symbolic steps aim to restore public confidence.

Policy recommendation: Linking budget allocations to measurable outcomes in infrastructure, health, and education could improve accountability and value for money.

Cocoa Sector Challenges
The cocoa sector poses a significant fiscal risk. COCOBOD’s debt stands at GHS 32.5 billion, with GHS 9.7 billion due by September 2025. Contract rollover losses already exceed US$ 840 million, with another US$ 495 million expected. Cocoa road commitments add GHS 21.7 billion in liabilities.

Policy experts suggest reforming cocoa marketing, hedging strategies, and increasing local processing to reduce vulnerability to global price swings. The government’s plan to process 50% of cocoa beans domestically is a step toward capturing more value from the sector.

Energy Sector Reforms
Total energy sector debt is GHS 70 billion, with a 2025 financing gap of US$ 2.2 billion. Despite GHS 45 billion collected under the Energy Sector Levies Act (ESLA), ECG alone owes GHS 68 billion. Reforms include a single ESLA revenue account, stricter enforcement of the Cash Waterfall Mechanism, and private partnerships like the ECG-Enclave Power pilot, achieving 99% revenue collection.

Policy recommendations: Expand metering, reduce transmission losses, adopt concession-based management models, and accelerate renewable energy integration. IPPs should include renewables in generation portfolios, with projects like Sunon Asogli’s solar initiative in northern Ghana demonstrating potential for sustainable energy growth.

Financial Sector Recovery
Ghana’s financial sector is gradually stabilizing after a costly GHS 29.9 billion clean-up. The Domestic Debt Exchange Programme (DDEP) has helped reduce Treasury bill rates, while cuts in policy and reference rates by the Bank of Ghana have improved capital access for businesses and individuals.

Policy advice: Continued macroeconomic consistency and regulatory oversight will strengthen investor confidence. Corporate bond market development could further ease domestic borrowing pressures.

Agriculture and Import Substitution
Ghana’s annual food import bill exceeds US$ 2 billion, with poultry imports accounting for 95% of consumption. Initiatives like the Agriculture for Economic Transformation Agenda (AETA), Feed Ghana, Nkoko Nkitinkiti, and AgriNext aim to boost local production, particularly among youth.

Policy recommendation: Investment in irrigation, warehouses, agro-processing zones, and market linkages will reduce dependence on imports and enhance rural incomes. A medium-term target to cut the import bill to around 10% of GDP could drive sustainable self-sufficiency without compromising trade.

Petroleum Sector Recovery
Crude production has declined by 32%, and investor exits threaten upstream activity. Revitalizing the Sekondi-Takoradi enclave and attracting fresh investment are critical. Accelerating gas utilization and exploring new basins like the Voltaian are key to boosting upstream output.

Policy experts urge competitive fiscal terms, regulatory certainty, and expedited licensing to attract investors.

IMF Program and Future Initiatives
Ghana continues to meet IMF program milestones, including DDEP coupon payments exceeding GHS 9.5 billion, signaling commitment to reform. President Mahama outlined bold initiatives, including a 24-Hour Economy policy, a US$ 10 billion infrastructure “Big Push,” tax rationalization, and a Renewable Energy and Green Transition Fund to drive industrialization and sustainable growth.

Conclusion
President Mahama’s first-year address underscored the administration’s ambitious recovery plan, balancing transparency about Ghana’s economic challenges with actionable policy reforms. As he declared, “I, John Dramani Mahama, will fix the economic crisis confronting our country and reset it on a path of growth and prosperity.” The success of these initiatives will shape Ghana’s economic trajectory for decades to come.