The World Bank’s latest report indicates Ghana’s steady progress towards economic stability over the past year, crediting strong monetary policies, debt restructuring, and structural reforms for this recovery. However, the report also notes ongoing challenges in the financial, cocoa, and energy sectors, as well as potential risks from election-related overspending.
The report, titled “Strengthening Domestic Revenue Systems for Fiscal Sustainability,” was presented by Mr. Stefano Curto, Lead Economist for Ghana, Liberia, and Sierra Leone at the World Bank office, in Accra on July 22. “The macroeconomic situation has improved considerably over the past year… growth in 2023 was more resilient than projected, reaching 2.9 percent. It is important to emphasise that Ghana has made commendable strides on fiscal consolidation,” said Mr. Curto.
Despite these improvements, the World Bank advises the government to enhance tax collection and fully implement policies linked to the $3 billion IMF loan-support programme to ensure sustained progress. Mr. Curto stressed, “The sustainability of these efforts hinges on a fundamental aspect – enhancing the country’s tax revenue while minimising the impact on growth and the poor and most vulnerable.” He recommended simplifying personal income tax, VAT, excise duty, corporate income tax, and rationalising tax exemptions.
Mr. Kwabena Gyan Kwakye, Economist, World Bank, Ghana, echoed the need for continued efforts, including expenditure management. He predicted a 3.1 percent growth for Ghana by the end of 2024, with the possibility of 5 percent growth by 2025 if stabilization efforts are fully implemented.
Dr. Alex Ampaabeng, Deputy Finance Minister, acknowledged challenges in the tax system and outlined ongoing reforms to improve domestic revenue collection. He noted Ghana’s low tax-to-GDP ratio, which led to the creation of the National Revenue Policy in 2023 and a medium-term revenue strategy to adapt to changing business dynamics.
Dr. Ampaabeng highlighted efforts to accurately identify taxpayers, with about 7.4 million taxpayers currently in the database, but only 1.9 million active. “What we’re doing now is to have accurate data on who is doing what. With the digitisation of addresses, linking of Ghana card with bank accounts and businesses, it’s much easier to access taxpayers,” he said.
The World Bank’s Ghana Economic Update aims to inform public discussions on economic issues, policy trade-offs, and build consensus among stakeholders to implement necessary reforms for sustainable and inclusive growth.
