Economic advisor to President John Mahama and former Finance Minister, Seth Terkper, has issued a cautionary message about Ghana’s current economic stability, stressing that it is not guaranteed to last.
Speaking on JoyNews’ PM Express Business Edition on Thursday night, Terkper stated that governments must be proactive in preparing for future economic shocks by building financial buffers now.
“Stability is not forever,” he said. “You cannot manage an economy continuously for four years without one crisis or the other.” He supported President Mahama’s earlier warning that although the macroeconomic indicators look positive, the country must remain cautious.
“President John Mahama is saying things are going well, but let’s be careful. Let’s make sure that when the trend starts to reverse, we have reserves,” he added.
Terkper likened building reserves to sacrifices made by households and businesses. He noted that the importance of saving during periods of growth cannot be overstated.
“To set reserves, as in households, as in businesses, is a sacrifice. When the chips are down, we must fall on them to stabilise the situation,” he explained. According to him, economic management must always include preparation for unforeseen disruptions. “It’s good to stabilise, but it is better to sustain.”
Addressing concerns about Ghana’s revenue outlook following the suspension of some import levies, Terkper acknowledged that it is a real issue.
He revealed that while the country’s current revenue stands at about 17–18% of GDP, the tax-to-GDP ratio is only 15%, which he described as low for a middle-income economy like Ghana. “Even for an African country, it should be 17% or 18%,” he said.
He pointed out that this is why the president and the finance minister have discussed the need for technical support to restore the VAT system to its previous efficiency.
Terkper also explained that many of Ghana’s levies were designed to be temporary and used as counter-cyclical tools. “We have had a temporary levy policy. You use them during austerity, and then you remove them.”
Citing the COVID-19 pandemic as an example, he explained that certain sectors, like digital services and telecommunications, experienced significant growth during that time. As a result, levies such as the Financial Sector Levy were introduced.
“There’s a sector that is booming. So you put a temporary levy on it. But of course, a time will come when COVID will be over. And indeed, it is.”
He urged Ghana to take lessons from COVID and prepare ahead for potential future outbreaks, such as Mpox. “Have we put some reserves aside, learning from COVID? So that when Mpox comes, we fall on those reserves to manage?”
Terkper clarified that such proactive measures are not about manipulating the economy but about managing it responsibly. “This is not saying you are manipulating the matter. No. You are only managing the economy because of the upside-down.”
He ended with a strong reminder that crises are inevitable. “You cannot manage an economy without a crisis. The question is whether you are ready when it comes.”
