A News Desk Story
Government must intensify its fiscal consolidation efforts while implementing structural reforms to ensure economic resilience and long-term sustainability, the World Bank has said in its latest Public Finance Review report.
Titled ‘Building the Foundations for a Resilient and Equitable Fiscal Policy’, the report highlighted economic expansion between 2008 and 2019 when gross domestic product (GDP) grew by an average of 6.8 percent annually – driven largely by oil production and debt accumulation.
However, this growth model left the country highly vulnerable to global shocks, as weak expenditure controls, inefficient public spending and costly borrowing led to a severe debt crisis by 2022.
Despite recent stabilisation measures, the World Bank noted that the fiscal trajectory remains fragile unless underpinned by deeper structural reforms.
“Ghana needs to persist in its ambitious fiscal consolidation efforts, ensuring that adjustments are both fair and sustainable,” said Robert Taliercio, World Bank Country Director for Ghana, Liberia and Sierra Leone.
According to the report, Ghana’s fiscal deficit averaged 4 percent of GDP from 2008 to 2019 – double the level recorded between 2000 and 2007. Meanwhile, total expenditures reached 19 percent of GDP, a 6-percentage point increase from the earlier period.
“It is crucial to protect pro-poor and pro-growth investment while enhancing domestic revenue mobilisation. Additionally, Ghana must address the increasing fiscal liabilities stemming from the energy and cocoa sector,” the World Bank rep continued.
The report identified four key policy priorities to stabilise the country’s finances: enforcing fiscal discipline, boosting domestic revenue mobilisation, managing external financing prudently and prioritising investment spending to support economic transformation.
The World Bank underscored need for a fiscal rule to ensure debt sustainability, coupled with stronger public financial management systems and greater fiscal transparency.
“To accompany fiscal consolidation efforts, the report calls for strengthening fiscal institutions and enhancing its public financial management and procurement systems,” David Elmaleh, Senior Economist and lead author, explained.
“This includes implementing a fiscal rule that ensures debt sustainability and increasing transparency and accountability through greater demand for timely fiscal data and independence of the Fiscal Council,” he added.
Domestic revenue mobilisation was also pointed out as a key area for reform. The report urged local authorities to broaden the tax base and strengthen tax administration to secure a more sustainable funding model for economic development.
Beyond fiscal discipline, the report warned against unsustainable borrowing – calling for a coherent policy on external financing that aligns investment returns with financial costs. This includes clearer guidelines on non-concessional borrowing and greater transparency in how external funds are allocated.
Ghana’s investment strategy, the report argued, must focus on public goods and economic transformation. It recommends targetted infrastructure development, technological innovation and climate resilience measures to drive long-term productivity.
“Ring-fence investment and prioritise public goods spending on human development while addressing inefficiencies,” the report urged.
The World Bank emphasised that these reforms will be crucial to maintaining fiscal stability and fostering sustainable economic development.
“The report’s recommendations are critical to ensuring Ghana’s fiscal stability and fostering sustainable economic development,” added Tamoya Christie, Senior Economist and co-author.
“The World Bank Group stands ready to support Ghana in implementing these strategies to achieve lasting prosperity and resilience,” she further stated.
