Ato Forson’s 7 pillars for economic reset

Finance Minister Dr Cassiel Ato Forson has announced a comprehensive seven-point economic recovery plan designed to reset the economy and put it back on the path of growth. 

Addressing participants at the National Economic Dialogue, Dr Forson outlined how the administration intended to implement strategic reforms, while safeguarding crucial social programmes for vulnerable citizens.

The first pillar focuses on strengthening domestic revenue collection through a balanced approach that emphasizes fairness, simplicity and efficiency in taxation.

"Our current tax system disproportionately burdens working people, while maintaining escape routes for others," Dr Forson noted, indicating plans to restructure Ghana's tax system to ensure greater equity and expand the revenue base.

In a departure from previous economic strategies, the second pillar introduces "qualitative fiscal consolidation" – an approach that protects essential growth-driving expenditures and social initiatives even as the government works to reduce spending and control fiscal deficits.

Economic experts believe this balanced methodology could help Ghana sidestep the shortcomings of earlier austerity programmes that compromised growth in pursuit of fiscal stability.

Adherence to PFMA - The third pillar emphasizes strict adherence to public financial management regulations, with Dr Forson pledging to implement strong commitment controls to ensure optimal value from government expenditures.

"We must guarantee that every taxpayer cedi is properly accounted for and delivers meaningful results," he stated, suggesting enhanced oversight for procurement processes and aggressive measures against wasteful spending that has historically depleted public funds. 

Improving public spending efficiency, particularly in social initiatives and infrastructure projects, constitutes the fourth pillar of the recovery strategy.

This addresses mounting questions about the effectiveness of current social programmes, with critics pointing to resources wasted through administrative inefficiencies and poor targeting. The new framework promises to streamline delivery mechanisms to ensure benefits reach intended recipients.

Energy subsidies 

The fifth pillar – likely to generate significant debate – involves gradually eliminating energy sector subsidies, which Dr Forson characterised as "expensive, regressive and ineffective.

"While recognising the potential immediate difficulties associated with removing these subsidies, he stressed that funding would be redirected toward more targeted social programmes benefiting Ghana's poorest citizens rather than maintaining general subsidies that predominantly advantage wealthier segments of society.

SOEs

State-owned enterprise reform comprises the sixth pillar, with a particular focus on organisations such as Cocobod and the Electricity Company of Ghana (ECG) that have generated substantial contingent liabilities and quasi-fiscal expenditures.

"These entities should generate profits or at minimum break even, instead of continuously depleting public resources," Dr Forson remarked, suggesting possible reorganisation and selective privatisation of certain state enterprises.

The final pillar aims to reinforce Ghana's fiscal framework by redesigning fiscal rules and strengthening automatic stabilisers. 

Dr Forson highlighted the importance of reducing budget inflexibilities and excessive revenue earmarking that have restricted the government's ability to respond effectively to economic fluctuations and emergencies.

Economic challenges

The Chairman of the National Economic Dialogue Planning Committee, Dr Ishmael Yamson, emphasized in his opening remarks that Ghana's economic difficulties are primarily self-created.

"These challenges must be addressed by our leadership and citizens working together," he stated, calling on all stakeholders to participate in redirecting the country's trajectory.

He warned that the path to economic transformation would face resistance from various quarters but expressed optimism that with committed leadership and national ownership, success remains achievable." Many Ghanaians stand ready to support your ambitious vision," he assured the government representatives present.

Dr Yamson expressed concern about youth disillusionment resulting from economic mismanagement and corruption, calling for immediate action to restore confidence and revitalise the economy.

"This Ghana bears little resemblance to what our founders envisioned. When young people can't see opportunities here, we face a dangerous situation," he observed.

He attributed these circumstances to prolonged governance failures, endemic corruption and economic instability, resulting in high unemployment, industrial decline and increasing import dependence.

"Today's political landscape is driven by power hunger, self-interest and arrogance. Corruption has become widespread, while institutions remain weak, forcing young Ghanaians to seek opportunities elsewhere," he lamented. 

While acknowledging external pressures including pandemic effects and global supply disruptions, Dr Yamson maintained that "the vast majority of our problems are homegrown and self-inflicted’’. 

"We cannot postpone Ghana's economic reset any longer. Failing to act decisively now will have severe future consequences," he warned.