The World Bank has stressed that Ghana must build a resilient fiscal system that supports long-term growth and development by addressing the root causes of its macroeconomic imbalances over the next three years. According to the latest report, “Ghana Public Finance Review: Building the Foundations for a Resilient and Equitable Policy”, the country’s recent economic struggles, marked by debt crises and slow growth, are the result of weak expenditure controls, ineffective public spending, underperforming revenue collection and high-cost borrowing.
The report highlights that Ghana’s public spending has increased significantly since 2010, outpacing economic growth and creating fiscal rigidities. The lack of budget discipline has led to rising interest payments that crowd out significant capital investment. Between 2020 and 2021, Ghana’s interest payments were two to four times higher than those of peer countries, adding to its debt burden.
Domestic revenue collection has also declined, falling from 15.7% of GDP in 2017 to 13% in 2021, and major tax revenues, including income tax and VAT, lag behind regional peers. To address these challenges, the World Bank recommends ensuring fiscal discipline, improving expenditure controls, and strengthening oversight of contingent liabilities, particularly in the energy and cocoa sectors.
Additionally, the report calls on the Ghanaian government to implement significant revenue reforms, such as phasing out tax exemptions, reducing customs exemptions, and increasing the progressivity of the personal income tax. The World Bank stresses that sustainable and equitable revenue mobilization is essential to Ghana’s economic recovery. Robert Taliercio, World Bank Country Director for Ghana, Sierra Leone, and Liberia, said Ghana’s macroeconomic outlook has improved but remains fragile.
Trump warned against a premature return to international capital markets, saying failure to fully implement fiscal adjustments such as reducing the debt-to-GDP ratio to 55% by 2028 could undermine policy credibility and long-term growth prospects.