CDD Ghana Calls For Stronger Structures For Economic Gains

Ghana Centre for Democratic Development (CDD Ghana) has delivered a measured but thought-provoking assessment of the first year of President John Dramani Mahama’s administration, concluding that while macroeconomic gains are evident, deep structural weaknesses continue to threaten long-term stability.

The presentation, led by Professor Atsu Amegashie, reviewed economic performance from January to December 2025. The verdict was balanced: progress has been made, but the foundations of the economy remain fragile.

According to Prof. Amegashie, on the surface, the numbers tell an encouraging story. Fuel prices declined between 4% and 8% during the year. Food inflation dropped sharply from 28.3% at the start of 2025 to 4.9% by year’s end. The stability of the cedi helped stabilize the cost of imported medicines and raw materials, easing pressure on businesses.

He noted that taxes such as the e-levy, betting tax, and emission levy were abolished. The debt-to-GDP ratio fell, largely due to external debt restructuring and what the presenters described as strict fiscal discipline.

Prof Amegashie also hailed the government for the decisive step it has taken to bring down interest rates.

“The debt to GDP ratio fell from 61.8%, 45%. This was largely due to the external debt restructuring. There was strict fiscal discipline, which is to say that the government is spending responsibly. And they recorded a figure from the Ghana Statistical Service, which found that between January 2025 and September 2025, 330,000 people found jobs. And then there was a fall in the interest rate, particularly the fall in treasury bill rates from 30% to 11%. So that means that the Mahama administration has done very well in its first year” Professor Atsu Amegashie.

Taken together, he stated that these indicators suggest that the administration has stabilized key macroeconomic variables in its first year.

Beyond GDP

Despite the improved debt-to-GDP ratio, Prof. Amegashie warned against celebrating too quickly. One of the strongest criticisms was directed at the continued reliance on debt-to-GDP as a primary measure of sustainability.

“We don’t pay or service debt from GDP. We service debt from revenue, not from GDP,” he stressed.

The concern is that while Ghana’s debt-to-GDP ratio has fallen, debt servicing remains heavy. Interest payments account for roughly 25% of government revenue. In practical terms, this means that for every cedi collected, about a quarter goes directly to servicing debt, leaving limited room for education, healthcare, and infrastructure.

Prof. Amegashie argued that comparing a stock measure like debt to a flow variable like GDP can be misleading. Instead, debt service as a proportion of revenue, both flow variables, provides a more accurate picture of fiscal pressure.

Upcoming obligations also raise concerns. Government is projected to pay GHS 20 billion in 2026 and GHS 50.3 billion in 2027 to settle maturing debts and interest. Those figures underscore that while ratios may look healthier, fiscal risks persist.

Although 330,000 jobs were reportedly created, unemployment remains high and job quality continues to be a challenge. Over 67% of employment remains in the informal sector.

Drawing comparisons with countries such as Japan, Germany, and Singapore, he emphasized that the public sector is not the primary engine of job creation. “The public sector cannot generate enough jobs. It is still the private sector,” the speaker noted.

This raises critical questions about Ghana’s business environment. If private sector growth is constrained by high costs, regulatory inefficiencies, and uneven tax enforcement, sustainable job creation becomes difficult.

The concept of “jobless growth” was also highlighted by Prof. Amegashie. He noted that an economy can record impressive GDP growth while failing to generate meaningful employment or improve development indicators like teacher-student and doctor-patient ratios.