Ghanaian economist Dr. Sa-ad Iddrisu has cautioned that the incoming National Democratic Congress (NDC) government may face a serious banking crisis due to the fragile state of the financial sector.

Speaking on Joy News’ AM Show on Monday, January 6, 2025, Dr. Iddrisu highlighted unresolved issues within the banking industry that could create significant challenges for the new administration.

He also criticized the outgoing Akufo-Addo government for failing to fulfill its promise of creating a GH¢1.5 billion Ghana Financial Stability Fund.

This fund was intended to provide relief to struggling banks but was never implemented.

Dr. Iddrisu noted that without this support, the financial sector remains weak, with banks suffering major losses under the current leadership.

“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 criticized the government for concentrating too much on growth figures, pointing out that a deeper look at the economy shows serious problems.

Dr. Iddrisu warned that if immediate steps aren’t taken to fix 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.