Ghana’s revenue-to-GDP ratio to exceed 17% within next six years, but expenditure to remain flat – IMF

Ghana’s revenue-to-Gross Domestic Product ratio is expected to exceed 17% year-on-year for the next six years.

According to the International Monetary Fund’s April 2024 Fiscal Monitor, the revenue-to-GDP ratio will increase steadily from 2024 to 2029.

In 2024, it is projecting a government revenue-to-GDP ratio of 16.7%, a slight increase from the 15.7% recorded in 2023.

For 2025, 2026, 2027, 2028 and 2029, the revenue-to-GDP ratio is estimated at 17.3%, 18.2%, 18.1%, 18.0% and 18.0% respectively.

This will be a vast improvement compared to the rates registered during the last 10 years.

Expenditure to remain flat

Meanwhile, the expenditure-to-GDP ratio will remain flat despite falling from 2023.

In 2024, 2025, 2026, 2027, 2028 and 2029 the expenditure-to-GDP ratio is projected at 21.7%, 21.6%, 21.8%, 21,2%, 21.2%, and 21.4%.

Meanwhile, the IMF in 2024 expects overall primary deficits are expected to narrow to 4.9% of GDP. However, substantial risks to public finances remain, and resuming fiscal policy normalization will require significant efforts against several headwinds.

The risks of fiscal slippages are particularly acute given that 2024 is what is being called the “Great Election Year”: 88 economies or economic areas representing more than half of the world’s population and GDP have already held or will hold elections during the year. Support for increased government spending has grown across the political spectrum over the past several decades, making this year especially challenging, as empirical evidence shows that fiscal policy tends to be looser, and slippages larger, during election years.”