Ghana to Reinstate Fiscal Responsibility Law Amid Debt Restructuring Success
The government, according to Databank Research, is set to reinforce its fiscal consolidation efforts following the successful restructuring of 90% of its domestic and external debt.
Key among its strategies is the reinstatement of the Fiscal Responsibility Act, which mandates that the fiscal deficit remain below 5% of GDP.
Databank Research projects a steady improvement in Ghana’s fiscal metrics, anticipating spending pressures to ease by 2025. The fiscal deficit is expected to narrow from a 2024 estimate of 5.0% ± 50 basis points to 4.7% ± 25 basis points in 2025.
Additionally, the government targets a 1.8% fiscal deficit reduction and a 0.5% primary surplus, aligned with commitments under the International Monetary Fund (IMF)-supported programme.
“Key initiatives, like the Medium-Term Revenue Strategy and a newly integrated property tax system, may help achieve these targets, provided current conditions persist. However, pressures to repeal certain tax measures could necessitate intensified revenue mobilisation efforts, potentially leading to the renegotiation and extension of Ghana’s US$3.0 billion IMF bailout programme,” Databank Research stated.
With global tensions easing, Databank Research also foresees minimal systemic shocks in 2025, positioning Ghana’s fiscal operations to stay within budgetary limits.
Positive Balance of Payments Amid External Pressures
Ghana’s external sector outlook remains promising, with Databank Research projecting a Balance of Payments surplus stabilising between 1.5% and 2% of GDP. This optimism is driven by enhanced crude oil export revenues, increased cocoa production, and anticipated tariff reductions.
“Private consumption and foreign direct investment are expected to recover, enabling the capital account balance to move out of negative territory. While net transfers could strengthen the current account balance, restructured debt coupon payments might strain financial buffers in the short term,” Databank noted.
Inflation is also forecasted to drop to approximately 12.4% by 2025, a development expected to boost investor confidence and support a more resilient external environment.
These projections by Databank Research suggest that Ghana is on a steady path to restoring fiscal discipline and achieving macroeconomic stability, contingent on maintaining effective policy implementation and revenue mobilisation efforts.
