The Institute for Fiscal Studies (IFS) has cast doubt on government’s revised 2025 revenue target, warning that it is not well grounded in economic realities and risks leaving critical spending underfunded.
According to Mr. Leslie Dwight Mensah, Senior Research Fellow at the IFS, the mid-year budget review projects total revenue and grants to rise from GH₵227.08 billion to GH₵229.95 billion which is an increase of GH₵2.87 billion, representing 16.4% of GDP. This increase is largely expected to come from a GH₵1 petroleum levy under ESLA.
However, Mr. Mensah argues that the revised target does not reflect first-half developments. “Despite revenue shortfalls in the first half of 2025, all revenue components, aside ESLA proceeds remain unchanged in the revised budget,” he observed.
Sharp First-Half Shortfalls Ignored
The IFS noted that oil revenue fell short by 42.9% (GH₵2.66 billion) in the first six months, yet government maintained the same full-year projection of GH₵16.51 billion. Similarly, import duty and non-oil non-tax revenue fell short by GH₵1.59 billion (12.7%) and GH₵1.48 billion (15.6%) respectively, but their annual projections were also left untouched.
In total, revenue shortfalls in the first half amounted to GH₵3.24 billion. To meet the revised target, government would not only need to plug this gap but also fully achieve its original second-half revenue targets, which IFS described as “very difficult to achieve.”
History Undermines Credibility
Mr. Mensah stressed that history is not on the government’s side. “For nearly a decade, Ghana has struggled to cross 16% of GDP in revenue mobilization. The highest achieved was 15.9% in 2024 despite repeated new measures. Against this background, the 16.4% target in 2025, using the same strategies, does not seem tenable.”
Implications for Spending and Financing
Failure to meet revenue targets, IFS warned, would perpetuate budget funding challenges, leaving capital investment and arrears payments underfunded. This, the Institute said, highlights the seriousness of Ghana’s revenue mobilization difficulties.
Interestingly, Mr. Mensah pointed out that weak expenditure execution could have a silver lining for government’s credit rating. “The tight expenditure pattern makes the government appear fiscally prudent, which could improve its rating. The government may then be tempted to leverage this to attempt a return to the international bond market, as it has already hinted.”
A Familiar Dilemma
The IFS’s assessment underscores a familiar tension in Ghana’s fiscal management: while ambitious revenue targets are repeatedly announced, the structural weaknesses of the economy, including reliance on volatile oil revenues and import duties, make them difficult to achieve. Without reforms that address these challenges, the risk of persistent underfunding of key development priorities remains high.
