Razia Khan Commends Ghana

Razia Khan

Chief Economist for Africa at Standard Chartered Bank, Razia Khan, has commended Ghana for its performance under the Extended Credit Facility (ECF) programme of the International Monetary Fund (IMF).

At a roundtable discussion with journalists on Friday in Accra, Ms Khan said the most important thing going forward is the institutionalization of the reforms.

“Sometimes, what gives investors more confidence is that we do see those reforms that become so deeply embedded that there is no longer a need to go from programme to programme.”

Ghana on track

According to her, Ghana, at the moment, was on track with the reforms that she was making.

“There is a lot that Ghana needs to do to properly institutionalize such reforms.

“It is on the right road. It is headed in the right direction; the progress is still going to be monitored for another year.”


“Government would have to take a hard look at what it did, and how effectively it was grooming the different sectors of the economy, especially, sectors that were contributing in a significant way to tax revenue, and where there was fiscal scope for improvement.”

Widening tax net

“One of the points that have been made is that even with the existing tax structure, compliance is an issue. When that tends to be the case, the answer may not be to raise the rates of that particular tax. It is much more likely to be how you widen the tax net. How do you improve compliance?”

Outlook with current indicators

Ms Khan said Ghana really stands out among sub-Saharan African peers and attributed that to the reforms the country had undergone.


She said Ghana’s public debt-to-GDP ratios remains elevated, notwithstanding the good things that were put in place, saying “Ghana must keep to the cause of fiscal transformation, fiscal sustainability, public debt sustainability. A lot of good has been achieved, and there’s still a great deal that needs to be done.”

The only way for a country with a high debt to GDP ratio to bring down that debt to GDP ratio overtime is either to see an extraordinary expansion in the denominator. GDP continues to be really good or it is a balance of growth, growth in GDP, and also looking to ensure that what it expends is less than what it earns as revenue.”

More revenue required

The chief economist revealed that the fact that Ghana has seen such high debt ratios in the past almost means that fiscal policy has to be more conservative.

“Ghana no longer has the space to be spending much more than it is earning in revenue. It now has to earn more revenue than it is spending to be able to bring that debt-to-GDP ratio down over time.”

High debt service costs

She said: “Right now, Ghana still has elevated debt service costs. The amount that it has to spend on interest payments is still very high relative to the revenue that it collects. Therefore Ghana does need to focus on improving revenue. And that will remain the case regardless of the GDP rebasing. What the GDP rebasing will help with is greater clarity on what constitutes the economy, which other sectors that are growing, how do they operate in relation to each other, and that should help with the revenue mobilization exercise overall.”

Cedi outlook

She stated: “Let’s not forget that a few years ago, the current account deficit as a percentage of GDP was in double digits. More recently, the current account deficit as a percentage of GDP had narrowed very significantly to look single digit. And part of what we have seen in the cedi’s stabilization reflects that.”

Risk prospects

“What are the risks going forward? We know that foreign investors own a great deal of the domestic debt market where foreign exchange reserves have improved. Ghana’s economy and its export base are still relatively diversified. Nonetheless shocks do happen. Ghana should still be looking to build its resilience to build its buffers against these potential shocks, but we also believe that this is exactly what will be healthy for the Ghanaian economy. And we are looking at the 5 percent top range.”


By Samuel Boadi