Debt Crisis And Inflation Drive Key Election Debate In Ghana

Debt Crisis And Inflation Drive Key Election Debate In Ghana

The management of Ghana’s struggling economy is a central issue as voters prepare to choose a new president on December 7. For many, like retired teacher Richard Tagoe, the economic downturn has been personal, with his life savings evaporating due to an IMF-backed debt restructuring deal and the devaluation of his bonds...READ MORE…

The election is shaping up to be a close contest between Vice President Mahamudu Bawumia, representing the ruling New Patriotic Party (NPP), and former President John Mahama, who is running for the National Democratic Congress (NDC).

President Akufo-Addo’s second term has been plagued by economic challenges, including high inflation, a depreciating currency, and a $3 billion deal with the International Monetary Fund to manage the country’s debt. As a result, many Ghanaians still feel the effects of these economic hardships.

Tagoe, an 82-year-old retiree, expressed his frustration: “I worked all my life and saved for my old age, but now, everything is virtually gone. How can we trust the government after this?”

Ghana, once a favorite among investors due to its stability and natural resources, has seen its reputation tarnished by its debt default. Inflation peaked at 54.1 percent in 2022 before dropping to 23.2 percent in late 2023, but many people continue to struggle with high costs of living, leading to sporadic protests.

The government’s attempts to secure funds through treasury bills have failed, and public trust in government securities has been severely damaged. Courage Boti, a research lead at GCB Capital, noted that while restructuring was necessary for fiscal space, the damage to public confidence is significant.

In September, Ghana reached an agreement with international bondholders to restructure $13 billion of debt, including a 37 percent haircut, making it the largest debt restructuring in Africa’s history and highlighting the severity of the nation’s crisis.

Security issues are also prominent in the election, with Ghana and its neighbors facing potential threats from jihadist groups operating across their northern borders in Burkina Faso and Niger.