The African Development Bank (AfDB) is forecasting a fiscal deficit of 7.6% to Gross Domestic Product (GDP) for Ghana in 2023.

This indicates that the country would be a weak performer, based on the AfDB metrics.

The Government of Ghana projected an overall fiscal deficit of ¢61.475 billion, equivalent to 7.7 percent of GDP, lower than the expected 9.4% in 2022 in the 2023 Budget and Economic Planning.

But AfDB said in its Africa’s Macroeconomic Performance and Outlook that Ghana is experiencing severe macroeconomic imbalances, including constrained revenues and weak investment flows.

On the continent, it said fiscal deficits are expected to gradually narrow in the near term, but uncertainties remain.

The average fiscal deficit in Africa is estimated to have narrowed to 4.4% of GDP in 2022 from 5.2 % in  2021 in the wake of fiscal strain induced by the COVID-19 pandemic.

The average fiscal deficit increased sharply from 4.1% of GDP in 2019 to 6.9% in 2020, due  to  the  fiscal  stimulus  measures  that  countries  deployed to  mitigate the pandemic’s impact.  The  deficit  narrowed in 2022 on improved revenue performance, especially in oil-exporting  countries. 

Fiscal positions across Africa projected to improve

Meanwhile, fiscal positions across the continent are projected to improve in the medium term, supported by  stronger revenue performance, which could create additional room for fiscal consolidation, especially  in countries  that  have  shrinking  fiscal  space from COVID-19 pandemic spending. Thus, Africa’s  average fiscal deficit is projected to be 4.3% of GDP in 2023, 0.3 percentage points higher than in  2019,  before the pandemic. 

The fiscal deficit is expected to further improve in 2024 to 3.9% of GDP, as economies sustain post pandemic revenue gains.

The Finance Ministry had earlier said provisional data on government fiscal operations for January – September 2022 showed shortfalls in revenue performance relative to expenditures.

This resulted in an overall budget cash deficit of ¢44.0 billion (7.4% of GDP), against a programmed deficit target of ¢36.684 billion (6.2% of GDP).