In his February 2025 State of the Nation address, President John Mahama expressed grave concerns over Ghana’s economic state, citing a mere $64,000 balance in the Sinking Fund. He highlighted significant financing challenges in the energy sector, projected debt servicing costs of GH¢280 billion, and stalled infrastructure projects. Mahama emphasized national collaboration to resolve the crisis and reaffirmed his commitment to restoring economic stability.
In his inaugural State of the Nation address on February 27, 2025, President John Mahama unveiled a concerning overview of Ghana’s current plight, revealing that the nation is in a severe economic crisis. He highlighted the dismal status of the Debt Service Reserve Account, commonly known as the Sinking Fund, which holds a mere $64,000, alongside GH¢143 million.
Mahama urged awareness that despite claims of having left sufficient buffers for debt repayment, the reality contradicts these assertions. He stressed that the energy sector is plagued by financing difficulties, exacerbated by substantial collection and system losses, violations of the Cash Waterfall Mechanism, and outstanding legacy debts which contribute to a $2.2 billion financing shortfall for 2025.
He remarked upon the challenges facing the financial sector, emphasizing the need for immediate corrective measures to tackle the accumulated debt – projecting that debt servicing will reach GH¢280 billion, including GH¢150 billion for domestic and GH¢130 billion for external creditors in the next four years.
Addressing stalled infrastructure projects due to debt default and restructuring, Mahama cited 55 halted projects that have accumulated a total of $2.95 billion in unallocated funds, warning of an anticipated cost overrun of approximately GH¢15 billion.
Mahama announced two significant events: a National Economic Dialogue set for March 3rd and 4th, followed by a budget presentation on March 11th. Both actions aim to transparently relay the true state of Ghana’s economic crisis to the public.
In his address, President Mahama expressed his determination not to dwell on grievances but to recognize challenges and focus on solutions. He proclaimed, “I have not come here to lament the state of our country, though there is much to lament,” highlighting his commitment to resolve Ghana’s pressing issues as reflected in the electoral support he received.
He reiterated his past success in addressing the power crisis, stating, “I promised to fix it, and I did!” He declared his intent to combat the current economic crisis with the same vigor and calls for national collaboration to rejuvenate the nation’s economy alongside Parliament and the people.
While reflecting on the inherited economic condition, Mahama described the situation as dire, stating that the problems are far deeper than had been publicly acknowledged. He likened the revelation of the economic status to a frog’s true length becoming apparent only after its demise, underscoring the extent of the challenges facing the nation.
He condemned the prior administration’s financial mismanagement, stating that even with an IMF program in place, fiscal prudence was poorly exhibited. He noted significant failures, with inflation exceeding projected targets and the Ghana cedi experiencing dramatic devaluation.
Mahama detailed the staggering public debt of GH¢721 billion and additional debts held by State-Owned Enterprises, particularly mentioning ECG’s debt of GH¢68 billion and COCOBOD’s GH¢32.5 billion. He revealed that failures in cocoa supply led to significant revenue losses for farmers and the Board, further complicating Ghana’s financial landscape.
Despite the gloom surrounding the economic outlook, President Mahama affirmed his commitment to lead the government in taking necessary steps towards economic revitalization, emphasizing his role as a facilitator in collaboratively building a prosperous Ghana.
President John Mahama’s first State of the Nation address reveals a concerning economic condition in Ghana, marked by severe debt and financial instability. The Sinking Fund reflects inadequate provisions for debt servicing, prompting urgent action to address economic challenges. Mahama’s commitment to transparency and collaboration showcases a determination to overcome these significant obstacles and restore growth in the nation.
Original Source: www.ghanabusinessnews.com
