Excessive Borrowing Weakened Ghana’s Economy Before COVID-19 – Financial Analyst

Financial Analyst Richmond Eduku has warned that Ghana’s current economic challenges are largely homegrown, stressing that the country’s structural weaknesses were already evident long before the COVID-19 pandemic and other global shocks.

His comments come in response to the World Bank’s 2025 Policy Notes, “Transforming Ghana in a Generation,” which argues that the 2022 macroeconomic crisis was not caused by the pandemic or the Russia-Ukraine war. Rather, these global disruptions merely exposed long-standing vulnerabilities such as high public debt, persistent fiscal deficits, weak revenue mobilisation, and slowing sectoral growth.

In a Facebook post on Sunday, September 28, Eduku wrote:

“Excessive borrowing and fiscal indiscipline weakened Ghana’s economy before COVID.”

Warning Signs Before the Crisis

Eduku pointed to key macroeconomic indicators showing that Ghana was already on a precarious path before the pandemic.

• Rising Debt: Public debt climbed from 56% of GDP in 2016 to 62% by 2019, while fiscal deficits consistently exceeded the recommended 5% threshold, often financed through short-term borrowing.

• Fiscal Mismanagement: He noted that government increasingly relied on debt even to pay salaries and statutory obligations rather than investing in productive sectors that could sustain long-term growth.

• Sectoral Slowdown: Agriculture growth slowed from 6.2% in 2017 to 4.7% in 2019, while industry — historically a key driver of structural transformation — fell sharply from 15.6% in 2017 to -3.6% in 2020, signalling contraction even before COVID-19. The services sector, typically a stabilising force, stagnated at 2.3%, reflecting a loss of momentum across the economy.

Structural Weaknesses Exposed

Eduku stressed that while the pandemic and the Russia-Ukraine war worsened economic conditions, they were not the primary causes of the crisis.

“The industry sector’s contraction in 2020, even before COVID-19, was a clear warning that Ghana’s growth model was unsustainable,” he said.

He added that temporary booms in extractives and construction had masked deeper weaknesses, leaving the country vulnerable to external shocks.

Call for Reforms

Eduku concluded that Ghana’s economic difficulties stem from excessive borrowing, weak fiscal discipline, and structural inefficiencies in key sectors. Without bold reforms to address these fundamental issues, he warned, the economy will remain exposed to both internal mismanagement and external disruptions.