The World Bank has identified a lack of budget discipline as a major factor behind Ghana’s worsening fiscal challenges. In its latest Public Finance Review, the Bank highlighted that unchecked public spending, surging interest payments, and increasing financial constraints have contributed to the country’s debt crisis. Ghana’s fiscal space has been further strained by excessive election-year spending, costly financial and energy sector bailouts, and pandemic-related expenditures, severely limiting resources for productive investments.
Government spending in Ghana has consistently outpaced GDP growth, with nearly 70% of total expenditure between 2010 and 2023 going toward public sector wages, interest payments, and statutory transfers. This imbalance has led to rising borrowing costs, crowding out essential capital investments required for infrastructure and long-term economic growth.
The World Bank’s report emphasizes the need for urgent reforms to reset the country’s fiscal strategy. It advocates for boosting domestic revenue, rationalizing tax exemptions, and enforcing stricter controls on government spending. The report warns that, without deeper reforms, Ghana could face a reversal of recent economic gains and continued financial instability.
To restore long-term stability, the World Bank stresses that policymakers must focus on curbing non-essential spending and strengthening public financial management. Adopting a more disciplined fiscal framework is seen as crucial for rebuilding economic confidence and attracting sustainable investments to the country.
Failure to implement these necessary reforms would risk prolonging Ghana’s fiscal challenges and could undermine its efforts to achieve economic growth and stability in the future. The World Bank’s message is clear: fiscal discipline and strategic reforms are essential to avoiding further financial deterioration.
SOURCE: CITI NEWSROOM