Economy projected to record negative primary balance for the next 3 years
Ghana’s economy is projected to record negative primary balance for the next three (3) years.
The projection by the IMF and stated in its April 2022 Fiscal Monitor, indicates that Ghana for 2022, 2023 and 2024 will recorded negative primary balance of 1.5%, 0.6% and 0.3% respectively.
The economy per the IMF’s projection is expected to revert to recording positive primary balance in 2025 with a 0.1% primary surplus posted in the said year – 2025.
The country since 2016 has been recording negative primary balance, in 2016 the primary deficit (negative primary balance) was 1.5%, 1.2% in 2017, 1.4% in 2018, 1.7% in 2019, 9.2% in 2020 and 1.9% in 2021.
For this year – 2022 – the government is targeting a primary balance surplus of 0.1%, but the IMF is of the view the government will be unable to achieve the primary surplus target as it expects the economy to post a 1.5 primary deficit for this year.
The 2022 Budget reinforce government’s commitment to the fiscal and debt sustainability agenda which commenced in 2021 through continued structural fiscal reforms, legislation of new revenue policy initiatives and expenditure rationalisation.
Ghana: Debt-to-GDP ratio projected to hit 84.6% at end-2022
The IMF has also projected Ghana’s debt as a percentage of Gross Domestic Product (GDP) to reach 84.6% this year.
The IMF asserts that the country’s debt-to-GDP ratio will increase from the projected 84.6% in 2022 to 88.4% in 2026, before falling to 87.4% in 2027.
But prior to that it will record relatively same debt-to-GDP ratio of 84% in 2022 and 2023, and later surge to 85% and 86% in 2024 and 2025 respectively.
According to the Fund, the rising debt may constrain government financing and as a result affect capital expenditure, unless government moves fast to shore up revenue.
Regarding the country’s tax revenues, the IMF is projecting tax revenue to GDP ratio to increase in 2022 to 16.5% from 14.7% in 2021.
This, the Fund says will be a vast improvement compared to the rates registered during the last 10 years.
“In 2023 and 2024, the country’s tax-to-GDP ratio will however fall to 16% and 16.2% respectively,” added the IMF.
