Ghana Public Finance Review

Investment Rating - The report does not explicitly provide an investment rating for the industry. Core Insights - Ghana's economic growth has been significantly impacted by debt accumulation, making it vulnerable to global shocks [28] - The need for stronger domestic revenue mobilization is emphasized to create fiscal space [51] - Public expenditure has been growing rapidly, burdened by high interest payments on debt, leading to inefficiencies in spending [64] - The report highlights the importance of improving public financial management (PFM) to enhance fiscal policy effectiveness [77] Summary by Sections Overview - Ghana's GDP growth has been strong but unsustainable, driven by oil production and expansionary fiscal policies, leading to increased debt levels [29][36] - The country has faced setbacks in poverty reduction due to recent global crises, necessitating a focus on macroeconomic stability and public investment [28] Domestic Revenue Mobilization - Ghana's revenue performance has declined, with tax collection falling from 15.7% of GDP in 2017 to 13% in 2021, significantly below its estimated tax capacity [51] - The report discusses the need for reforms in personal income taxes and VAT to improve revenue collection [51][56] Public Expenditure - Government spending has nearly doubled from 2010 to 2022, with a significant portion allocated to public sector wages and interest payments, limiting fiscal flexibility [64] - High interest payments have crowded out capital expenditures, leading to insufficient public investment in infrastructure [68] Public Financial Management - Despite some progress in PFM reforms, challenges remain, including delays in budget preparation and ineffective expenditure controls [77] - The report identifies weaknesses in cash management and commitment controls, contributing to significant arrears accumulation [84]