IMANI’s Fiscal Recklessness Index Reveals Alarming Rise in Tax Infractions and Audit Failures
Ghana’s fiscal management challenges have reached a critical juncture, with the latest Fiscal Recklessness Index (FRI) report from IMANI Africa and Oxfam Ghana underscoring mounting concerns over pervasive tax infractions and weak internal audit functions across public institutions.
The FRI, evaluating financial irregularities between 2021 and 2023, finds that tax-related infractions now account for a striking 90% of the total, up from 65% in the previous assessment. This increase highlights systemic weaknesses in revenue assurance and enforcement, despite recent reforms by the Ghanaian government aimed at strengthening fiscal compliance.
According to the report, the Ghana Revenue Authority (GRA) has been unable to enforce compliance effectively, with significant delays observed among VAT-registered businesses and Oil Marketing Companies (OMCs) in remitting their tax dues. These compliance lapses generate substantial budget shortfalls, which have forced the government to resort to borrowing to finance its operations. The fiscal strain limits the government’s ability to deliver timely and quality public services, as revenue collection falls short of expectations.
The report’s findings point to the need for stronger enforcement mechanisms within the GRA, as well as more stringent measures to address tax evasion. Without these, Ghana faces an unsustainable fiscal trajectory, as recurrent budgetary deficits are likely to continue, affecting long-term economic stability.
The report underscores that many tax infractions could be avoided if the GRA enforced compliance more rigorously, suggesting the potential benefits of adopting advanced digital monitoring and real-time auditing tools to detect and address lapses as they occur.
Equally troubling is the performance of internal audit functions within Ministries, Departments, and Agencies (MDAs), which the FRI identifies as a major driver of fiscal infractions. Weak internal audit oversight has allowed for repeated instances of unsupported payments, improper procurement practices, and unauthorized withdrawals of government funds. The failure of MDAs to adhere to recommendations from Audit Review Committees exacerbates these irregularities, revealing a systemic breakdown in governance protocols and oversight.
The report indicates that internal audits within MDAs remain largely ex-post, lacking real-time integration with the Government Integrated Financial Management Information System (GIFMIS). As a result, infractions often occur before auditors become aware, suggesting a need for proactive audit approaches that can preemptively address compliance risks.
IMANI Africa and Oxfam Ghana suggest that strengthening the internal audit framework and embedding auditors within the financial decision-making processes of MDAs could mitigate many of the issues identified.
Perhaps the most concerning is the continued fiscal recklessness attributed to the Ministry of Finance (MoF). The FRI report designates the MoF as Ghana’s most fiscally reckless institution from 2021 to 2023, consistent with previous assessments dating back to 2015.
In 2023 alone, Ghana reportedly lost over GHS 4.9 billion to financial irregularities, with the MoF responsible for nearly 90% of these losses. The persistence of these issues within the nation’s top financial institution underscores the urgent need for rigorous fiscal reform to restore financial accountability and safeguard Ghana’s economic future.
