By; Deborah Pofara Luu
A recent World Bank report has revealed that Ghana’s economic expansion between 2008 and 2019, largely fueled by oil production and debt accumulation, has left the country susceptible to global economic shocks.
The Public Finance Review report, titled “Building the Foundations for a Resilient and Equitable Fiscal Policy,” indicates that despite efforts to stabilize the economy since 2022, structural reforms are necessary to address the root causes of the country’s economic challenges.
The report identifies weak expenditure controls, inefficient public spending, underperforming revenue collection, and costly borrowing as factors contributing to Ghana’s recent debt crisis.
According to the World Bank, Ghana’s average fiscal deficit was about 4% of GDP from 2008 to 2019, which is double the figure from 2000 to 2007.
Expenditures also averaged 19% of GDP during the same period, 6 percentage points higher than in 2000 to 2007.
Robert Taliercio, World Bank Country Director for Ghana, Liberia, and Sierra Leone, emphasized the need for sustained fiscal consolidation efforts.
“Ghana needs to persist in its ambitious fiscal consolidation efforts, ensuring that adjustments are both fair and sustainable,” Taliercio stated.
He further added, “It is crucial to protect pro-poor and pro-growth investment, while enhancing domestic revenue mobilization. Additionally, Ghana must address the increasing fiscal liabilities stemming from the energy and cocoa sector”.
The World Bank’s report also highlighted that Ghana’s GDP growth of 6.8% annually from 2008 to 2019 was primarily driven by the oil sector, but at the cost of increasing debt levels.
The report suggests that Ghana must implement measures to improve expenditure controls, enhance revenue collection, and promote more efficient public spending to mitigate the risk of external shocks.
