Ghana’s struggle with fiscal challenges has been ongoing, and the World Bank has identified a lack of budget discipline as the primary cause. Apexnewsgh reports
The Bank’s latest Public Finance Review reveals that unchecked public spending, rising interest payments, and increasing financial constraints are key issues that need to be addressed.
The report highlights that Ghana’s fiscal space has been severely limited due to election-year overspending, costly bailouts in the financial and energy sectors, and pandemic-related expenditures. This has reduced the resources available for productive investments. Between 2010 and 2023, nearly 70% of total government expenditure went towards public sector wages, interest payments, and statutory transfers, far outpacing GDP growth and squeezing funds meant for infrastructure and economic expansion.
As borrowing costs surged, interest payments took up a larger share of government spending, leaving little room for critical capital investments necessary for long-term development. To address these challenges, the World Bank urges Ghana to reset its fiscal strategy by focusing on four key areas:
– Boosting Domestic Revenue: Increasing domestic revenue mobilization to support Ghana’s development goals.
– Rationalizing Tax Exemptions: Streamlining tax incentive regimes and improving revenue administration.
– Enforcing Stricter Expenditure Controls: Implementing effective spending controls to prevent new arrears accumulation and improve budget execution accuracy.
– Adopting a More Disciplined Fiscal Framework: Strengthening public financial management and adopting a fiscal rule to ensure debt sustainability.
The World Bank warns that without deeper fiscal reforms, Ghana risks reversing recent economic gains and prolonging financial instability. It calls on policymakers to curb nonessential spending, strengthen public financial management, and adopt a more disciplined fiscal framework to restore economic confidence and attract sustainable investments.
Source: Apexnewsgh.com
