World Bank Urges Ghana to Reset Its Fiscal Strategy, Calls for Stricter Expenditure Controls

Accra, Ghana - 13 Feb, 2025 - Ghana's fiscal woes have reached a critical juncture, with the World Bank warning that the country's lack of budget discipline is threatening to derail its economic progress.

In its latest Public Finance Review, the Bank highlights that Ghana's government spending has consistently outpaced GDP growth, leading to a surge in interest payments and a strain on the country's fiscal space.

The report notes that excessive election-year spending, costly bailouts in the financial and energy sectors, and pandemic-related expenditures have all contributed to Ghana's fiscal challenges. With nearly 70% of total expenditure between 2010 and 2023 allocated to public sector wages, interest payments, and statutory transfers, the country's ability to invest in critical infrastructure and economic growth has been severely impaired.

To avoid a looming fiscal crisis, the World Bank is urging Ghana to reset its fiscal strategy by boosting domestic revenue, rationalizing tax exemptions, and enforcing stricter expenditure controls. The report warns that without deeper reforms, Ghana risks reversing recent economic gains and prolonging financial instability.

Ghana's fiscal challenges have already had a significant impact on the country's economy, with the cedi, the local currency, experiencing significant volatility in recent years. The country's debt-to-GDP ratio has also risen sharply, reaching over 80% in 2023.

To address these challenges, the Ghanaian government must take decisive action to strengthen public financial management, curb non-essential spending, and adopt a more disciplined fiscal framework. The World Bank's report serves as a timely reminder of the need for Ghana to take a proactive approach to addressing its fiscal challenges and ensuring a sustainable economic future.

Source: Lead News Online