Ghana is likely to reintroduce the Fiscal Responsibility Act as part of broader fiscal consolidation measures following the successful restructuring of 90% of its domestic and external debt. This act underscores Ghana’s commitment to fiscal responsibility.
This is highlighted in Databank Research’s latest projections, which signal a renewed focus on fiscal discipline and macroeconomic stability.
The Fiscal Act mandates that the fiscal deficit remain below 5% of GDP. Databank Research projects Ghana’s fiscal deficit to narrow from an estimated 5.0% ± 50 basis points in 2024 to 4.7% ± 25 basis points in 2025. This projection reflects the importance of maintaining fiscal responsibility.
Additionally, the government aims to achieve a 1.8% fiscal deficit reduction and a 0.5% primary surplus under the International Monetary Fund (IMF)-supported programme. Fiscal responsibility will be a guiding principle in these efforts.
Efforts to meet these targets include the implementation of the Medium-Term Revenue Strategy, designed to boost tax compliance and collection. An Integrated Property Tax System, aimed at generating additional revenues. These initiatives contribute to overall fiscal responsibility.
However, pressures to repeal certain tax measures could necessitate intensified revenue mobilisation or adjustments to Ghana’s US$3 billion IMF bailout programme. Ghana’s external sector is expected to maintain a positive trajectory, with a projected Balance of Payments surplus stabilizing between 1.5% and 2% of GDP. The principle of fiscal responsibility remains important here as well.
Key drivers include increased crude oil export revenues, enhanced cocoa production, enticipated tariff reductions. While restructured debt coupon payments may temporarily strain financial buffers, private consumption and foreign direct investment are expected to recover, improving the capital account balance. All these improvements align with the concept of fiscal responsibility.
Inflation is forecasted to decline to approximately 12.4% by 2025, further bolstering investor confidence. Combined with easing global tensions, this is expected to create a more stable and resilient economic environment. Adherence to fiscal responsibility will help achieve these outcomes.
Databank Research notes that maintaining effective policy implementation and revenue mobilisation will be critical to sustaining Ghana’s fiscal recovery. The projected improvements in fiscal metrics and external accounts suggest that Ghana is steadily progressing toward restoring fiscal discipline and macroeconomic stability. Fiscal responsibility will play a key role in this progression.
It is envisaged that sound fiscal management could position Ghana as a more attractive destination for investment and a model for effective debt restructuring in Africa. With a focus on fiscal responsibility, Ghana could set a benchmark on the continent.
