Ghana’s 2022 economic collapse was largely driven by domestic vulnerabilities, with the loss of access to international capital markets in 2021 marking a critical turning point, according to Prof. Godfred Bokpin, a finance expert at the University of Ghana Business School.
Speaking on JoyNews’ Top Story, Prof. Bokpin said investors had already identified cracks in the economy before the pandemic, warning that the country’s fiscal trajectory was unsustainable.
“By the third quarter of 2021, it was clear that Ghana’s debt-induced macroeconomic instability had begun. Once we lost market access, we became exposed both internationally and domestically,” he said.
The professor highlighted that prior borrowing had concealed fiscal weaknesses, allowing the government to maintain the appearance of stability. Loans from state enterprises such as Cocobod were treated as “off-balance sheet,” and the central bank later financed government spending with over GH¢40 billion in printed money.
These developments, Prof. Bokpin noted, led to a debt-to-GDP ratio of 109 per cent and a debt service-to-revenue ratio between 22 and 25 per cent, far exceeding sustainable levels.
“COVID-19 and the Russia-Ukraine war only magnified existing vulnerabilities. The crisis was inevitable due to weak debt management, poor accountability, and fiscal indiscipline,” he stressed.
