State of the nation is not good, sinking fund has $64,000 balance – Mahama

Giving his first State of the Nation address after his election on December 7, 2024 in Parliament today February 27, 2025, President John Mahama said the state of the nation is not good.

He said while there have been claims that buffers were left for debt repayment, the statement of accounts for the Debt Service Reserve Account, also known as the Sinking Fund, shows a balance of only $64,000 and GH¢143 million in the dollar and Ghana cedi accounts, respectively

“Mr. Speaker, as I stated earlier, Article 67 of the 1992 Constitution requires that I give an account of the State of our Nation to Parliament. I am sad to report that the state of our nation is not good. Our economy is in crisis, and our people are suffering unprecedented hardships,” he said.

President Mahama said the energy sector is facing significant financing challenges primarily due to collection and system losses, non-compliance with the Cash Waterfall Mechanism, and legacy debts.

The financing shortfall has risen considerably to approximately $2.2 billion or GH¢34 billion for 2025, and urgent measures will be needed to reduce it to sustainable levels and ultimately eliminate it.

He noted that the financial sector continues to struggle despite the previous government reportedly spending GH¢29.9 billion on the financial sector clean-up exercise to date.

“They also left scant reserves for debt servicing despite implementing what may be considered the most severe and distressing economic policy in the annals of the Fourth Republic, if not in the entirety of our nation’s history—the Domestic Debt Exchange Programme.  This is in stark contrast to our actions in 2017, before we left office, when we allocated US$ 250 million to the Sinking Fund to service debt.

While there have been claims that buffers were left for debt repayment, the statement of accounts for the Debt Service Reserve Account, also known as the Sinking Fund, shows a balance of only $64,000 and GH¢143 million in the dollar and Ghana cedi accounts, respectively,” he said.

He was of the view that the repercussions of reckless debt accumulation and economic mismanagement will require extensive work and sacrifice to repair. 

“In the next four years, debt servicing will amount to GH¢280 billion, comprising GH¢150 billion for domestic and GH¢130 billion in external debt servicing,” he said.

According to the President, the catastrophic debt position has also severely impacted infrastructure projects that should have been completed.

“There are 55 stalled projects due to the default of debt and subsequent restructuring, with a total amount of $2.95 billion not disbursed. The stalling of these projects is expected to result in a cost overrun of about GH¢15 billion,” he pointed out.

The President announced that there will be a National Economic Dialogue on March 3rd and 4th.

“On March 11th, the Minister for Finance, on my behalf, will present the budget estimates for the financial year to this August House. These two events will allow us to present the real state of Ghana’s economic crisis to the people,” he said.

The President stating that it was not his style to lament and shift blame when confronted with challenges, as others often do, said his approach is to accept challenges and work hard to resolve them.

“Indeed, that is precisely what the people of Ghana elected me to do. I have not come here to lament the state of our country, though there is much to lament. I understand why I was elected with such high voter confidence—to solve their problems,” he said.

The President further went on to elaborate on how he and his team intends to address the problems.

“Yesterday, February 26, 2025, marked exactly ten years since I stood in this chamber, at this very spot, to declare my determination to fix Dumsor, a legacy problem of power shortages. And I fixed it!

Yes, I promised to fix it, and I did! I wish to place firmly on record that from January 2016 until I handed over the administration of this country on January 7, 2017, there was no power rationing or load management in Ghana.

Mr. Speaker, today, inspired by the almighty God and propelled by the massive mandate given me by the good people of Ghana, I am moved to make a similar purposeful and bold declaration. That, I, John Dramani Mahama, will fix the economic crisis confronting our country and reset it on a path of growth and prosperity,” he declared.

He noted that his government, working with Parliament and every Ghanaian, will solve the challenges because “we have developed a plan with our people’s support,” he said.

Continuing his presentation, he said: “When I decided to run for President again, I did so because of what I knew about the state of our country. I was aware that huge problems awaited me upon my assumption of office. But nothing could prepare anyone for the reality of the depths to which our economy and governance have sunk.

Our elders say that a frog’s true length can be ascertained only after it has died. And how right they are.

It is common knowledge that our economy is in dire straits, which is putting it mildly because, after an initial assessment of the books, we have discovered that our economic problems are much deeper than was publicly known. We have inherited a country that is broken on many fronts. The profundities of the challenges are staggering,” he said.

The President pointed out to the fact that the country is saddled with staggering debts and glaring signs of almost deliberate and, in some cases, criminal mismanagement of the country’s resources.

“Mr. Speaker, not even the restraints of an IMF programme were enough for the previous economic managers to exercise prudence in managing our finances.

After setting an inflation target of 18 per cent by the end of 2024, the actual rate was 23.8 per cent, significantly exceeding the IMF threshold. The Ghana cedi continued its downward slide, losing 19% of its value against the dollar in 2024. It had already lost 27.8% in value in 2023,” he said.

According to the President, in addition to the public debt, which amounts to a staggering GH¢721 billion, several State-Owned Enterprises are also in debt, including ECG, which owes GH¢68 billion. Ghana Cocoa Board—the hope of cocoa farmers—is also highly indebted. Its balance sheet indicates a total debt of GH¢32.5 billion, of which GH¢9.7 billion is due to be paid at the end of September 2025. 

In the 2023/2024 crop season, COCOBOD could not supply three hundred and thirty-three thousand seven hundred and sixty-seven (333,767) tonnes of cocoa, which it sold at $2,600 per tonne. As a result, the then management of COCOBOD rolled over these contracts into the 2024/2025 cocoa season.

This implies that for every tonne of cocoa delivered this year in fulfilment of the rolled-over contracts, COCOBOD and the Ghanaian farmer would lose $4,000 in revenue,” he said.

The President indicated that the COCOBOD has supplied 210,000 tonnes out of the rolled-over contract, resulting in a revenue loss of $840 million for both COCOBOD and the Ghanaian farmer, adding that, COCOBOD and the Ghanaian farmer will lose another $495 million when the Board finishes supplying the remaining rolled-over contracts.

Additionally, he said the cocoa road commitments alone total GH¢21.7 billion, of which only GH¢4.4 billion is included in the total debt of GHS 32.5 billion. This debt has arisen mainly because of the decision in 2019 and 2020 to award road contracts worth over $1 billion because of the election.

“Notwithstanding this gloomy background, I remain committed to leading this government, taking every necessary step to reset our economy, getting things back on track, and working with the good people of our country to build the Ghana we want,” he said.

By Emmanuel K Dogbevi

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