A Ghanaian economist, Dr. Sa-ad Iddrisu, has warned that the incoming administration, led by the National Democratic Congress (NDC), could face a severe banking crisis.

According to him, the country's financial sector is weak, and there are unresolved issues that could pose a challenge for the next government.

According to a report by myjoyonline.com, the economist made these remarks on the AM Show on Joy News on Monday, January 6, 2025.

He further criticised the Akufo-Addo-led government for failing to deliver on its promise to establish a GH¢1.5 billion Ghana Financial Stability Fund, which was meant to support struggling banks.

Dr. Iddrisu pointed out that the lack of this fund has left the financial sector vulnerable, with banks recording significant losses under the current administration.

“Banks have made losses amounting to GH¢60 billion, including the Bank of Ghana itself,” Dr. Iddrisu stated. “This is not an economy that is doing well. If the financial sector was healthy, such massive losses would not be recorded.”

He noted that the promised stability fund, which was supposed to help stabilize the sector, has not been fully established, adding that the outgoing government has only secured a partial commitment of $250 million from the World Bank, which is not fully there yet.

“This is just one example. If the economy was truly performing well, we wouldn’t be leaving such massive debts for the next administration to inherit,” he said.

The economist expressed concern over the government’s focus on GDP growth as a measure of economic success.

He asserted that while the outgoing administration has announced a GDP growth rate of 7%, the figure does not reflect the overall growth of the economy.

“An economy cannot be judged solely by its growth rate. GDP growth does not necessarily mean the population is doing well. Other critical sectors, like energy and banking, tell a different story,” he explained.

He criticised what he described as the government’s narrow focus on growth statistics, stating that a more comprehensive view of the economy reveals significant weaknesses.

Dr. Iddrisu warned that without urgent action to address the financial instability, the NDC government will inherit a collapsed banking sector.

“The NDC is likely to face serious banking crises if the stability fund is not established. Handing over a weakened financial sector and massive debts is not the mark of an economy that is doing well,” he remarked.

JKB/MA

Watch as NDC Deputy Youth Organiser cautions incoming government appointees below: