John Kwakye suggests four key ways in which Mahama’s SONA initiatives should be funded

The Director of Research at the Institute of Economic Affairs (IEA) Dr John Kwakye has suggested ways in which the initiatives in announced by President John Dramani Mahama in his 2025 state of the nation address can be funded.

Among the suggestions include the need to look at the natural resources for revenue.

“If asked how President Mahama’s numerous SONA initiatives will be funded, l will suggest: enhanced revenue mobilisation, cutting wasteful expenditure, checking pillage of state funds, and tapping more natural resource receipts,” he wrote on his X page.

If asked how President Mahama’s numerous SONA initiatives will be funded, l will suggest: enhanced revenue mobilisation, cutting wasteful expenditure, checking pillage of state funds, and tapping more natural resource receipts.

— J. K. Kwakye (@JohnKwabenaKwa1) February 27, 2025

During the SONA on Thursday February 27, President Mahama indicated that “Mr. Speaker, the energy sector faces 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 US$2.2 billion or GHS 34 billion for 2025, and urgent measures will be needed to reduce it to sustainable levels and ultimately eliminate it.”

He added that the financial sector continues to struggle despite the previous government reportedly spending GHS 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 GHS 143 million in the dollar and Ghana cedi accounts, respectively.

 

“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 GHS 280 billion, comprising GHS 150 billion for domestic and GHS 130 billion in external debt servicing. The catastrophic debt position has also severely impacted infrastructure projects that should have been completed. There are fifty-five (55) stalled projects due to the default of debt and subsequent restructuring, with a total amount of US$ 2.95 billion not disbursed. The stalling of these projects is expected to result in a cost overrun of about GHS 15 billion.

“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. We are doubling our efforts to complete all outstanding structural reforms. Through the budget, we will implement corrective measures to restore fiscal discipline and debt sustainability. We are also working towards completing the upcoming fourth review of the IMF-supported Programme.

“The review is scheduled from April 2^nd to April 15^th, 2025, and the IMF Executive Board is expected to approve it in June 2025. As we have done previously, we are also building buffers in the Sinking Fund and adopting prudent debt management practices to ensure prompt repayment of upcoming domestic and external debt maturities.

“In this respect, the government successfully honoured the matured coupon payment of GHS 6.081 billion (in cash) and GHS 3.46 billion (in kind) due in February 2025 to all Domestic Debt Exchange Programme (DDEP) bondholders. We have also built additional buffers in the Sinking Fund to honour maturing DDEP bonds due in July and August. With the transparent and prudent measures we have implemented since taking over the administration of this country, I urge my countrymen and women, business owners, and foreign investors to trust our competence in turning our economic fortunes around.”

 

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