The International Monetary Fund is projecting a marginal reduction in Ghana’s fiscal deficit to Gross Domestic Product (GDP) of 7.3% in 2023, from the 9.9% recorded in 2022.

This is coming despite a significant cut in government expenditure and expected improvement in revenue.

According to its April 2023 Fiscal Monitor Report, the fiscal deficit will however increase to 8.4% of GDP in 2024.  

This indicates that the country’s fiscal economy will still experience financing challenges.

The fiscal deficit to GDP will then lower to 7.3% in 2025. It will subsequently go down to 5.9%, 5.3% and 5.4% of GDP in 2026, 2027 and 2028 respectively.

Based on the figures, the country’s fiscal deficit to GDP would remain the highest in Sub-Sahara Africa. Zambia follows closely with a fiscal deficit of 9.1% of GDP in 2022.

Primary balance estimated at 0.1%

The primary balance will however end this year with a surplus of 0.1% to GDP, from a deficit of 2.8% in 2022.

This is a result of an anticipated strong revenue growth in 2023.

It will then inched up to 0.6% in 2024 and subsequently expand to 1.0% of GDP consistently from 2025 to 2028.

Meanwhile, the Director of Fiscal Affairs at the IMF, Vitor Gaspar, has advised the government of Ghana to ensure that fiscal policy is consistent with monetary policy to restore price and financial stability, while supporting the most vulnerable.

“Abrupt changes in financial conditions also call for fiscal restraint to tackle fiscal vulnerabilities. To that end, governments will need to give greater priority to rebuilding fiscal buffers by developing credible risk-based fiscal frameworks that promote”, Mr. Gasper said.