Ghana has made significant economic progress over the years, with an impressive annual GDP growth rate of 6.8% from 2008 to 2019. This growth, largely driven by oil production and debt accumulation, has also left the country highly vulnerable to external shocks. According to the World Bank Group’s latest Public Finance Review report, titled “Building the Foundations for a Resilient and Equitable Fiscal Policy,” Ghana’s recent debt crisis has been worsened by weak expenditure controls, inefficient public spending, underperforming revenue collection, and high-cost borrowing. While the country has taken steps to stabilize its economy since 2022, deeper structural reforms are necessary to address these underlying weaknesses and ensure long-term economic resilience.
Robert Taliercio, the World Bank Country Director for Ghana, Liberia, and Sierra Leone, emphasized the importance of maintaining Ghana’s fiscal consolidation efforts while ensuring that adjustments are fair and sustainable. He stressed the need to protect investments that support economic growth and poverty reduction, while also improving domestic revenue mobilization. Furthermore, he highlighted the fiscal challenges posed by Ghana’s energy and cocoa sectors, urging the government to take decisive action in managing fiscal liabilities.
The report indicates that Ghana’s fiscal deficit averaged around 4% of GDP between 2008 and 2019, which was twice as high as the previous decade. During this period, government expenditures reached an average of 19% of GDP, marking a six-percentage-point increase compared to the years 2000 to 2007. David Elmaleh, a Senior Economist and lead author of the report, pointed out that strengthening fiscal institutions and improving public financial management systems are essential to supporting Ghana’s economic transformation. He recommended implementing a fiscal rule to ensure debt sustainability, increasing transparency in financial reporting, and reinforcing the independence of the Fiscal Council to enhance accountability.
To lay the foundation for a stable fiscal system, Ghana must take comprehensive measures to address macroeconomic imbalances. This includes entrenching fiscal discipline through strict spending controls, effective oversight, and the use of technology to enhance financial transparency. Additionally, Ghana must focus on improving domestic revenue mobilization by strengthening tax administration and broadening the tax base to support national development goals. Managing the country’s financing mix is equally crucial, ensuring that financial costs align with expected returns on investment while adopting a clear policy on external borrowing.
Investment spending remains a key pillar in Ghana’s economic strategy. The report underscores the importance of protecting investments in public goods, particularly in human development, while addressing inefficiencies in public expenditure. Prioritizing infrastructure development and technological innovation will support economic transformation and enhance climate resilience, positioning Ghana for long-term growth.
By implementing these reforms, Ghana can build a more resilient and equitable fiscal policy framework that will not only stabilize its economy but also create a sustainable path for future development. The coming years will be critical in determining the country’s ability to strengthen its financial systems and ensure economic stability for generations to come.
