Ghana must prepare for future economic shocks- Seth Terkper

Seth Terkper, economic advisor to President John Mahama, has cautioned that Ghana’s current macroeconomic stability is only temporary and could be disrupted if proactive measures aren’t taken.

Speaking on PM Express Business Edition Thursday night, the former Finance Minister stressed that no economy is immune to crises, and the only way to ensure resilience is to build solid financial buffers in advance. “Stability is not forever. You cannot manage an economy continuously for four years without facing some kind of crisis,” he said.

Terkper backed calls by President Mahama for caution, despite recent signs of economic calm. He urged the government to focus on building reserves now, to cushion the country when economic headwinds inevitably return. “President Mahama is right in saying things are going well, but we must be careful. Let’s make sure we have reserves when the trend reverses.”

He emphasized that setting aside reserves, just like in household or business finances, requires discipline and sacrifice. “When things fall apart, it’s those reserves that help stabilise the economy.”

Terkper argued that real economic management involves preparing for shocks, not just enjoying short-term success. “It’s good to stabilise, but it’s better to sustain,” he noted.

When asked about the potential revenue impact of suspending import levies, Terkper acknowledged it could be significant. “Our revenue-to-GDP ratio is around 17–18%, but tax revenue alone is just 15%. That’s low for a middle-income country. Even for African standards, we should be doing 17% to 18%.”

He pointed to the importance of restoring Ghana’s VAT regime and emphasized the need for technical support to do so.

Terkper also reminded viewers that several levies introduced in Ghana were meant to be temporary and counter-cyclical. “During crises like COVID-19, certain sectors, like telecommunications and fintech, boomed. That’s why the Financial Sector Levy was introduced. But when the crisis ends, those levies should go too.”

Using the pandemic as a learning opportunity, he called for better preparation for future shocks, such as outbreaks like Mpox. “Have we put aside reserves after COVID? If something like Mpox strikes, do we have buffers to manage it?”

Terkper dismissed claims that such reserve strategies manipulate the economy. “This isn’t manipulation, it’s responsible management. Economies go through ups and downs. The real question is: are we ready when the next crisis hits?”

He ended with a warning: while current gains are welcome, Ghana must not become complacent. “Success is not permanent, and crisis is not avoidable. Our readiness is what will make the difference.”