Ghana’s fiscal deficit to narrow to 4.5% of GDP in 2024; GH¢55.93bn to be spent on interest payments

Ghana’s fiscal deficit to Gross Domestic Product (GDP) ratio is expected to narrow to 4.5% ± 50 basis points in 2024, Databank Research has disclosed.

This is due to interest savings from the external debt restructuring though election-induced fiscal overruns remain a concern.

The Bank of Ghana put the country’s fiscal deficit to 2.5% of GDP as of September 2023.

In its 2024 Quarterly Report, the research firm said potential interest savings from the external debt restructuring could improve fiscal balance.

The government budgeted GH¢19.04 billion towards the external interest payment despite halting debt service with the ongoing negotiations with the various creditor groups.

We believe the government could secure interest savings after concluding restructuring deals, which could improve the fiscal balance”, it pointed out.

The government plans to spend GH¢55.93 billion on interest payments in 2024, whilst GH¢63.8 billion will be spend on compensation of employees.

For revenue and grants, the government plans to mobilise GH¢176.41 billion. GH¢173 billion will come from domestic revenue.