At the presentation of the 2024 World Development Report titled The Middle-Income Trap, World Bank Chief Economist Indermit Gill called on Ghana to prioritize the quality of public spending and enhance revenue-raising mechanisms to avoid economic stagnation.
Speaking during a discussion on how emerging economies like Ghana can achieve sustainable growth, Gill stressed that better public expenditure management and more efficient tax administration are key to navigating the country’s economic challenges.
The 2024 World Development Report reveals that only 34 of 108 middle-income countries have reached high-income status over the past three decades. Gill pointed to South Korea’s phased economic approach, which combined investment with foreign technology and innovation, as an example for Ghana to follow.
He emphasized that while public spending is critical for development, it must be well-targeted, ensuring funds are directed toward productive areas like infrastructure, education, and healthcare. Efficient spending, he said, is vital to maximizing the impact of public investments.
Gill also highlighted the need for Ghana to improve its tax collection processes. Strengthening tax administration and closing revenue loopholes could broaden the tax base and reduce the country’s dependence on external financing.
Reforms in tax policy and compliance mechanisms would help Ghana generate more domestic revenue, allowing it to fund crucial development projects and reduce borrowing.
To avoid falling into the middle-income trap, Gill urged Ghana to diversify its economy by reducing reliance on primary commodities such as gold, cocoa, and oil. He encouraged investment in sectors that promote value addition and industrialization. He also stressed the importance of innovation, productivity growth, and human capital development to sustain economic progress.
Gill further emphasized the need for fiscal discipline, urging Ghana to manage its public debt responsibly and ensure borrowing is used for productive investments rather than short-term consumption. Strengthening governance, improving public financial management, and ensuring inclusive growth were also highlighted as essential components of Ghana’s path to achieving high-income status.
