CDD Says Living Conditions Improved in Mahama’s First Year Amid Cedi Gains, Lower Inflation

The Centre for Democratic Development (CDD-Ghana) has reported a notable improvement in living conditions for many citizens during the first year of President John Dramani Mahama’s administration, attributing the gains to macroeconomic stability, currency appreciation and declining fuel prices.

In its one-year assessment of the Mahama government, CDD noted that although lower inflation technically means prices are rising more slowly, many Ghanaians experienced actual price reductions across key sectors — providing tangible relief in the cost of living.

Fuel and Transport Relief

According to the report, fuel prices at the pump declined by approximately 4% to 8% between December 2025 and January 2026.

This reduction translated into a 15% drop in commercial transport fares, easing commuting costs and reducing the expense of transporting goods across the country.

Sharp Decline in Food Inflation

Food inflation recorded a dramatic fall, declining from 28.3% in January 2025 to 4.9% by December 2025.

CDD further noted that the appreciation of the cedi helped stabilise the cost of imported essentials, including medicines and industrial raw materials — offering relief to households and businesses alike.

However, the think tank cautioned that improvements have not been uniform nationwide. While major urban centres such as Accra and Kumasi saw stronger price adjustments, northern regions experienced slower relief due to logistical bottlenecks, including weak transport and communication infrastructure.

Fiscal Consolidation and Tax Relief

CDD credited the administration’s fiscal consolidation efforts as a key driver of the improved macroeconomic environment.

By cutting wasteful spending and terminating underperforming programmes, the government reportedly reduced the fiscal deficit from 7.9% to 3.1%, achieving a temporary surplus by mid-2025.

The report stated that fiscal discipline enabled the government to abolish several so-called “nuisance” taxes, including:

• E-Levy

• Betting Tax

• Emission Tax

Additionally, the VAT threshold was raised to shield small businesses from excessive tax burdens.

“The state has managed to stabilise the economy without imposing additional tax burdens on the average Ghanaian,” the report stated.

Revenue Mobilisation Concerns

Despite the positive developments, CDD warned that revenue mobilisation remains a structural weakness.

Tax revenue currently stands at 16.1% of GDP, below levels seen in neighbouring countries such as Senegal and Côte d’Ivoire.

The think tank cautioned that insufficient domestic revenue may compel increased borrowing, potentially raising public debt levels.

This risk is heightened by the rollout of large-scale projects, including:

• The GH₵13.85 billion “Big Push” infrastructure programme

• The “MahamaCares” health trust initiative

While these programmes promise long-term developmental benefits, CDD stressed that sustainable financing will be critical to prevent fiscal strain.

AI as a Revenue Solution

CDD identified AI-driven tax compliance systems as a promising solution to boost revenue collection efficiency.

According to the report, enhanced digital monitoring and enforcement could help offset revenue losses from abolished taxes while improving compliance without increasing rates.

Overall, the assessment concludes that while macroeconomic stability has translated into measurable cost-of-living relief, maintaining fiscal sustainability and strengthening revenue mobilisation will be crucial in the years ahead.

Source: Accra Business News