Prof Asuming Describes 2026 Budget Strategy “Comforting”, Cites Shift Toward Domestic Financing and Comprehensive Tax Reforms
Economist and Senior Lecturer at the University of Ghana Business School (UGBS), Professor Patrick Asuming, says the 2026 Budget provides a clearer strategic direction for Ghana’s fiscal management, particularly in the areas of tax reform and domestic financing.
Speaking during the NorvanReports–Economic Governance Platform (EGP)–Ghana Anti-Corruption Coalition (GACC) X Space Discussion on the theme “Ghana’s Tax Paradox: Can the VAT Reforms Deliver Relief While Expanding Revenue?”, Prof Asuming said he is encouraged by the Finance Minister’s commitment to overhaul the country’s tax laws and reduce reliance on foreign borrowing.
“The other thing that I found quite comforting about the budget was that the finance minister has promised not only the VAT that is going to be reformed, but all our tax laws are going to be reformed with the goal to broaden the tax base and bring in more revenue without introducing additional, especially indirect, taxes,” he said.
According to him, the minister’s indication that government plans to reopen the domestic long-term market to issue bonds for infrastructure financing signals a welcome shift from the excessive external borrowing that contributed to Ghana’s recent economic crisis.
“For me, the reason I find that comforting is that it’s beginning to communicate to everybody that the real reason why we went into the crisis was over-reliance on foreign financing,” he noted.
Prof Asuming, however, cautioned that while the policy direction appears sound, its credibility will depend on sustained discipline in implementation.
“Your first and second year in government are not the true test. The true test is your third and fourth year, where elections are getting closer. That’s where we really see whether the fine-sounding plans will be adhered to,” he added.
VAT Efficiency and Fiscal Projections
Commenting further on the proposed Value Added Tax reforms, Prof Asuming said he had been particularly curious about how government would balance its fiscal commitments while honouring its promise to remove the COVID-19 Health Recovery Levy — which he described as the most revenue-generating of the taxes earmarked for removal.
He expressed satisfaction that the budget outlines reforms focused on improving compliance and efficiency rather than imposing new tax burdens.
“If you look at Ghana’s tax effort, the last projection I saw was even under 60%. If through compliance you manage to improve VAT effort to 70 or 80%, you’re going to rake in so much revenue that you will be able to reduce some taxes,” he observed.
He described the budget’s ability to maintain a primary surplus while reducing the overall deficit from 2.8% to 2.2%, even as it allocates resources to flagship programmes, as “very impressive”.
“If by the end of next year the government is able to execute the budget to even 90% of what has been done this year, then we would have to say the finance minister has done an extremely good job,” he said.
Details of the VAT Reform Package
Finance Minister Dr Cassiel Ato Forson, presenting the 2026 Budget Statement to Parliament on November 13, announced a comprehensive overhaul of Ghana’s VAT regime to make the tax system more equitable, transparent, and business-friendly.
According to him, the reforms are the outcome of months of analysis and broad consultations.
Key reforms include:
Abolition of the COVID-19 Health Recovery Levy
Abolition of the decoupling of GETFund and NHIL levies from the VAT base, restoring input-output tax deductibility
Abolition of VAT on reconnaissance and prospecting of minerals
Reduction of the effective VAT rate from 21.9 percent to 20 percent
Increase in VAT registration threshold from GH¢200,000 to GH¢750,000
Extension of VAT zero-rating on locally manufactured textiles to 2028
Dr Forson said removing the COVID-19 levy alone will return GH¢3.7 billion to households and businesses in 2026.
He added that restoring input-output deductibility for the GETFund and NHIL levies will reduce the cost of doing business by about 5 percent, resulting in total savings of GH¢5.7 billion.
