Ghana, called the Gold Coast when it was a British colony, has been one of the few stars of African economic and political performance. But public employees’ pay, which eats up 70 percent of government revenues, may threaten its status.
Ghana’s economy has averaged an impressive 6 percent annual growth in recent years. But this month, it asked the International Monetary Fund for help.
This year, its currency fell by one-third against the dollar. Public debt soared to more than half of gross domestic product. Its budget deficit hit 10.1 percent.
The IMF will impose conditions that will be painful for Ghanaians, who enjoy fuel subsidies and lax tax collection. The IMF’s prescriptions often include a ceiling on public debt, a civil servant pay freeze, a limit on subsidies, and privatization of government services.
Ghana’s political situation seems solid now, after a stormy period that followed its independence in 1957. Its long-term economic prospects also remain good. Its resources include not only gas, oil, gold, diamonds, and cocoa, but also its people’s positive, resourceful attitude.
In the meantime, it will need to cut back a bit to retain its star status.