Ghana’s macroeconomic imbalances lead to high fiscal deficit forecast
The African Development Bank (AfDB) has forecasted a fiscal deficit of 7.6% of Gross Domestic Product (GDP) for Ghana in 2023, indicating a weak performance for the country according to the bank’s metrics.
This is higher than the government’s own projection of a 7.7% fiscal deficit, equivalent to ¢61.475 billion, in its 2023 Budget and Economic Planning.
The AfDB cites severe macroeconomic imbalances, including constrained revenues and weak investment flows, as the reasons for Ghana’s projected deficit.
The bank’s report, Africa’s Macroeconomic Performance and Outlook, states that while fiscal deficits are expected to narrow across the continent in the near term, uncertainties remain.
The average fiscal deficit in Africa is estimated to have narrowed to 4.4% of GDP in 2022 from 5.2% in 2021, following the fiscal strain caused by the COVID-19 pandemic.
Fiscal positions across Africa are projected to improve in the medium term, supported by stronger revenue performance and creating additional room for fiscal consolidation, particularly for countries that have seen their fiscal space shrink due to COVID-19 spending.
The bank projects that Africa’s average fiscal deficit will be 4.3% of GDP in 2023, 0.3 percentage points higher than in 2019, before the pandemic.
The deficit is expected to further improve in 2024 to 3.9% of GDP as economies sustain post-pandemic revenue gains.
