“Fiscal Consolidation is the Vaccine — Will Ghana Take the Full Dose? Dr. Domfe questions
Dr. George Domfe, Senior Research Fellow at the Institute of Economic Research and Public Policy (IERPP) and the Centre for Social Policy Studies (CSPS) at the University of Ghana, has cautioned government officials and policymakers against growing optimism over the country’s recent economic performance.
Speaking at IERPP press conference on the theme, “Unpacking Critical Elements of the Govt’s 2025 Mid-Year Fiscal Review”, particularly on Monetary Policy at the Ghana International Press Centre, Dr. Domfe described fiscal consolidation as “the vaccine” against recurring economic instability, but questioned whether Ghana would commit to taking the “full dose.”
According to Dr. Domfe, Ghana’s recent economic successes including a historic trade surplus of $4.98 billion in 2024 and a notable appreciation of the cedi must not lead to complacency. He noted that while these developments signal short-term relief, deeper structural vulnerabilities persist and must be urgently addressed to prevent a reversal of gains.
“Over-reliance on gold exports, persistent dependence on the International Monetary Fund, and our chronic import addiction remain dangerous pressure points for our economy. These are not just economic habits; they are structural risks. Without bold and sustained reforms, the cedi may return to its familiar cycle of depreciation, and Ghana’s fiscal space could once again narrow,” Dr. Domfe stated.
Ghana’s strong trade performance in 2024 was driven by a surge in merchandise exports, which reached $20.22 billion — up from $16.7 billion in 2023. Gold exports alone accounted for $11.64 billion, the highest in more than a decade, reflecting rising global prices and improved production. Crude oil exports followed with $3.87 billion in earnings. These inflows contributed to a robust trade surplus and bolstered the country’s foreign exchange reserves, helping stabilize the cedi throughout the year.
However, Dr. Domfe warned that this reliance on a few primary commodities exposes the economy to price shocks and global market volatility. “Gold is doing well now, but what happens when prices fall? What happens if production slows or geopolitical tensions affect demand? We’ve seen this before,” he cautioned.
He also stressed that Ghana’s frequent engagements with the IMF — including the recent debt restructuring programme and budgetary support while helpful in the short term, should not be a permanent fixture in the country’s economic planning. “IMF support is a crutch, not a cure. The cure is fiscal discipline, effective revenue mobilization, and long-term planning. Fiscal consolidation is the vaccine — but are we ready to take the full dose, or just enough to get by?” he asked.
Dr. Domfe called for a renewed commitment to structural reforms, especially in the areas of domestic production, value addition, and economic diversification. He argued that Ghana’s import dependence, particularly for manufactured goods and processed food items, continues to drain foreign exchange and undermines long-term currency stability.
“We must not let temporary appreciation distract us from the hard truth: until Ghana produces more of what it consumes and exports more of what it manufactures, we will remain vulnerable,” he said.
