The economic advisor to President John Mahama, Seth Terkper, has warned that the current stability in Ghana’s economy is only temporary.
Speaking on PM Express Business Edition on Thursday night, the former Finance Minister said governments must prepare for the inevitable next crisis by building buffers now.
“Stability is not forever,” he said. “You cannot manage an economy continuously for four years without one crisis or the other.”
He backed President Mahama’s call for caution 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 reserves as a sacrifice.
“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 economic management must include preparation for shocks. “That is how to sustain reforms,” he said. “It’s good to stabilise, but it is better to sustain.”
When asked whether Ghana’s revenue outlook could be affected by the suspension of some import levies, Mr Terkper admitted it was a factor.
“Let me illustrate. Our revenue today — and I’m talking revenue, not just tax — is about 17-18% of GDP. But our tax-to-GDP ratio is only 15%.”
He said that is low for a middle-income country like Ghana. “Even for an African country, it should be 17%, 18%,” he added.
“That’s why the president, the minister, and others have spoken about getting technical assistance to bring the VAT regime back to where it was.”
Seth Terkper argued that some of Ghana’s levies were always intended to be temporary.
“We have had a temporary levy policy. You use them during austerity, and then you remove them. They are similar to counter-cyclical measures.”
He used COVID-19 as a case in point.
“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 explained that not all sectors suffer in a crisis.
“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 said Ghana should learn from COVID and prepare for future events like Mpox.
“Have we put some reserves aside, learning from COVID? So that when Mpox comes, we fall on those reserves to manage?”
Mr Terkper insisted that saving for shocks is not manipulation.
“This is not saying you are manipulating the matter. No. You are only managing the economy because of the upside-down.”
He ended on a sober note, saying, “You cannot manage an economy without a crisis. The question is whether you are ready when it comes.”
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