Research and investment advisory firm, Fitch Solutions, is projecting tougher times for the Ghanaian economy in 2023.

According to the UK based firm, the government will have to significantly cut capital expenditure or impose new taxes to boost revenue in order to address the financial challenges in the economy.

This it believes will help narrow the financial gap and create fiscal space going forward.

“Expenditure has risen and this is driven by interest expenditure. Ghana took a lot of expensive debt and continue to borrow during the pandemic and this means interest payment are very elevated now”.

“They account for about 55% of total government fiscal intake, keeping expenditure elevated. Given the rigid nature of the Ghana’s expenditure profile, the government cannot easily reform spending resulting in those wide fiscal deficit”, it stressed

Fitch Solutions further explained that “the government has really two option at the moment to improve fiscal position; either capital expenditure or significantly increasing the countries tax base”

It mentioned that both actions will inflict some economic pains, adding “so they are no easy choices for the government”.

IMF deal to be closed by December 2022

Government is presently negotiating with the International Monetary Fund for an economic programme. There are indications that the deal might be closed before the end of the year.

“As part of an IMF deal, however, we expect that the government will have to implement fiscal consolidation measures in 2023 including the widening of the tax base. We expect that the commitment to fiscal consolidation will lead to gradually improvement in public finances.”

“And we also expect the government to be quiet eager to meet the IMF target as the authorities will aim to restore investor sentiments and so regain access to international capital markets”, it concluded. The country has lost over $1.5 billion in 2022, as investors liquidate their investments.