The World Bank has entreated the government to maintain momentum and stay on course with ongoing fiscal reforms to build a strong and resilient economy.
The World Bank Country Director for Ghana, Liberia and Sierra Leone, Robert R. Taliercio who made the call in Accra yesterday, said though the country’s macroeconomic outlook had improved due to the 93 per cent completion of its debt restructuring, the economy remained fragile.
He was speaking during the launch of the World Bank’s latest and flagship report titled Ghana Public Finance Review “Building the Foundations for a Resilient and Equitable Fiscal Policy.”
Mr Taliercio in his remarks said the risk facing Ghana now was complacency with the achievements it had made under the International Monetary Fund programme and the country’s debt restructuring exercise, and “returning to a business-as-usual mindset – a recurring error in the past.”
“Not fully completing the adjustment programmes – reducing debt to Gross Domestic Product ratio to 55 per cent by 2028- could jeopardise the credibility of policy reforms and the fundamentals for long-term growth,” Dr Taliercio said.
The World Bank Country Director cautioned that a premature return to the international capital market could send the wrong signal to markets and a reversal to unsustainable borrowing costs.
Mr Taliercio said there was the need for the government to “strengthen fiscal discipline” to ensure effective expenditure management and control, indicating that the government expenditure grew faster than GDP between 2010-2020 and about 70 per cent of this was dedicated to public wages, interest payments, and earmarked statutory funds.
The World Bank Country Director also emphasised the need to boost domestic revenue collection to enlarge fiscal space.
He said the share of revenue to GDP fell to 13 per cent by 2021, below comparator countries.
To enhance domestic revenue mobilisation, Mr Taliercio said the government must ensure tax compliance, broaden the tax net.
He said the tax exemptions on Value Added Tax, Personal Income Tax and import duties must be critically looked at, saying these tax handles “cost about 3.9 per cent of GDP in lost revenue.”
Mr Taliercio said the government must prioritise investments in infrastructure, Information Communication Technology, research and development and technological innovation.
“Using fiscal policy to support innovative financing mechanisms for a climate-resilient and low-carbon economy through climate-smart agriculture, integrated water and forest management, resilient cities and infrastructure, and a clean energy transition,” he stated.
Touching on the importance of the report, the World Bank Country Director said it explored the critical role of effective fiscal policies and public financial management in achieving sustainable and equitable economic growth.
“It offers an in-depth look at the efficiency, equity, and impact of public revenue and expenditure in Ghana, aiming to inform the country’s fiscal consolidation efforts as it recovers from overlapping crises,” Mr Taliercio stated.
He said the World Bank would support the government’s “reset” agenda towards economic transformation and fiscal sustainability, a cornerstone for sustainable growth.
The Finance Minister, Dr Cassiel Ato Baah Forson, in a speech read on his behalf, said the Ghana Public Finance Review came at a pivotal moment with a transition in government when the government sought to implement far-reaching reforms to strengthen public financial management, improve expenditure efficiency and boost domestic revenue mobilisation.
He said strengthening fiscal discipline, enhancing domestic revenue mobilisation, and addressing fiscal liabilities from State-Owned Enterprises especially in the energy sector were critical to ensuring sustainable economy growth.
He said the government would enhance tax administration by restructuring the Ghana Revenue Authority, operationalise the Independent Tax Appeals Board and enact a Natural Resources Revenue Management Act.
“We will also diversify funding options through initiatives like Diaspora Bonds and seek membership in the Islamic Development Bank to broaden development financing opportunities,” Dr Forson stated.
He said the Ghana Public Finance Review report provided valuable insights and recommendations that would guide the government’s fiscal consolidation efforts.
The Government Statistician, Professor Samuel K. Annim, lauded the World Bank for the report and stressed the need for all stakeholders to actively engage with government financial statistics.
BY KINGSLEY ASARE