Ghana Presidential Hopeful Targets 6% Growth for Debt-Hit Nation

Moses Mozart Dzawu
·2-min read

(Bloomberg) -- Ghana’s Vice President Mahamudu Bawumia, the underdog for the top job in December’s elections, outlined ambitious plans to lift economic growth to an average of 6% and reduce the debt-hit nation’s spending.

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Unveiling his party’s manifesto Sunday in Takoradi, northwest of the capital, Accra, the 60-year-old highlighted infrastructure projects and a more efficient procurement process to save 30 billion cedis ($1.9 billion) a year. The plans are geared toward helping sustain the West African nation’s post-debt restructuring recovery.

“Fiscal discipline and private sector empowerment will be the key to realizing our commitment to job and wealth creation,” he said. His administration “will reduce the fiscal burden on government by empowering the private sector to do more.”

Ghana is exiting a prolonged debt restructuring that included painful austerity measures, which forced it to seek help from the International Monetary Fund. But analysts said public frustration over poor growth and the high cost of living makes Bawumia look like a long shot in the Dec. 7 election, where he will face former president and opposition leader John Dramani Mahama.

“The incumbent party faces an uphill task to retain power,” analysts at BancTrust & Co. wrote in an Aug. 14 note. President Nana Akufo-Addo is stepping down after his second and final term. They saw Bawumia, the presidential candidate of his New Patriotic Party, likely to share in the blame.

“Our position is supported by the widespread unpopularity of the NPP due to the austerity measures implemented by the government over the past two years as part of the IMF programme and debt restructuring,” they wrote.

Analysts at Eurasia Group also saw an exit from the debt revamp as “unlikely to meaningfully improve” Bawumia’s election prospects. Voters blame the current government for poor economic management and that’s clearly positioning “Mahama as the favorite to win the upcoming election,” they wrote in the June 18 note, giving him a 60% chance of victory.

“Bawumia’s recent campaign efforts are unlikely to change this situation,” they said.

Ambitious Targets

Bawumia said he would lift economic growth by boosting agriculture and small businesses, and through new mining projects. He also pledged to use technology to make the government more efficient and to introduce a “friendly” tax regime to spur the private sector.

Ghana defaulted in 2022 and sought International Monetary Fund help, which granted it a $3 billion bailout. The country has almost finished restructuring around $47 billion of public obligations, backed by the IMF program, which has helped to reduce inflation, limit exchange rate depreciation and lift the economy.

The central bank held its benchmark interest rate unchanged at 29% for a third consecutive meeting on July 26 to help curb exchange rate pressures. Inflation cooled for a fourth straight month to 20.9% in July.

(Updates with economic-growth target in first paragraph)

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