Ghana’s revenue-to-GDP ratio projected to rise to 18% in 2029; expenditure to remain stable at 21% of GDP
Ghana is poised for a notable fiscal shift over the next six years, with the revenue-to-GDP ratio expected to climb steadily, according to the International Monetary Fund’s April 2024 Fiscal Monitor.
The projected uptick, from 16.7% in 2024 to 18.0% in 2029, marks a significant improvement compared to the rates observed over the past decade.
This promising trend signals an increasing government revenue base relative to the economy’s size, potentially bolstering public spending on critical infrastructure and social programmes.
In contrast, the expenditure-to-GDP ratio is anticipated to remain relatively stable, fluctuating between 21.2% and 21.8% from 2024 to 2029. This suggests a measured approach to public spending, reflecting a commitment to fiscal prudence amidst rising revenues.
However, the IMF’s report also sounds a note of caution. 2024, dubbed the “Great Election Year” with 88 economies, Ghana included, set to hold elections, poses heightened risks to fiscal discipline.
Historically, empirical evidence points to looser fiscal policies and larger fiscal slippages during election years due to political pressures to ramp up spending to appease voters.
The warning from the IMF underscores the imperative for Ghana to maintain fiscal discipline and transparency, particularly in the face of the upcoming elections.
A deviation from prudent fiscal policies could jeopardise macroeconomic stability, deter foreign investment, and undermine the country’s long-term economic prospects.
