Unpacking Ghana’s economic recovery & vaccination strategy

Ghana, like many countries around the world, is facing a double challenge of economic recovery and vaccination strategy in the midst of the ongoing global pandemic. President Nana Akufo-Addo recently shared that an additional three hundred thousand vaccines are expected to arrive in the country this week as part of the ambitious goal to vaccinate 20 million Ghanaians by the end of the year. However, John Gatsi, Dean of the School of Business at the University of Cape Coast in Ghana, pointed out that while vaccination is essential for economic recovery, the number of vaccines currently available is still far below what is needed to make a significant impact. According to Gatsi, Ghana's economic recovery is not solely dependent on its own vaccination efforts but is also influenced by the success of major economies in rolling out vaccines. The country's small open economy means that its economic activities are closely linked to global trends. Therefore, the ability of major economies to vaccinate their populations and restart economic activities will have a direct impact on Ghana's recovery. One of the hardest-hit sectors in Ghana has been hospitality and tourism. While some parts of these industries have begun to recover, challenges remain, especially with beaches and tourist attractions still restricted. Gatsi emphasized the need to redefine what true economic recovery means, stating that it is not just about sectors reopening but about robust economic activities taking place across all industries. In terms of Ghana's debt strategy, the recent issuance of a three billion-dollar Eurobond, which was oversubscribed, reflects the country's efforts to manage its debt and ensure long-term sustainability. The oversubscription was driven by the attractiveness of the bond's coupon rate to investors, allowing Ghana to mobilize funds for debt repayment and budget management. However, Gatsi noted that the cost of borrowing has increased compared to previous similar bonds, indicating a shifting financial landscape. Looking ahead, the World Bank projects that Ghana's fiscal deficit will remain significant, possibly reaching 12.1% of GDP. This poses a challenge for the country's fiscal authorities in managing their budget effectively. Despite governmental measures to address inflation and revenue generation, the risk of the fiscal deficit exceeding projections looms large. Gatsi highlighted the need for clear strategies to close the fiscal gap, including aligning expenditure with revenue streams and implementing effective measures to boost revenue. As Ghana navigates the complexities of economic recovery and vaccination strategy, the path ahead remains uncertain. The country's ability to adapt to evolving global conditions, manage its debt responsibly, and address fiscal challenges will play a crucial role in determining its economic future amidst the ongoing pandemic.