World Bank Urges Ghana to Implement Long-Term Economic Reforms for Sustainable Growth
The World Bank has called on Ghana to prioritize long-term reforms aimed at creating a robust fiscal system to stabilize its economy and promote sustainable growth. This recommendation was made during a public forum held at the Kempinski Hotel on February 12, which focused on the findings of the latest Public Finance Review report titled “Building the Foundations for a Resilient and Equitable Fiscal Policy.”
Robert Taliercio, the World Bank Country Director for Ghana, Liberia, and Sierra Leone, highlighted the precarious state of Ghana’s economy, which has shown impressive GDP growth of 6.8% annually from 2008 to 2019, primarily driven by oil production and debt accumulation. However, this growth has left the country vulnerable to global economic shocks.
Taliercio pointed out that Ghana’s recent debt crisis was exacerbated by weak expenditure controls, inefficient public spending, underperforming revenue collection, and costly borrowing. Despite the government’s efforts to stabilize the economy since 2022, he stressed the need for structural reforms to address the root causes of the crisis and support long-term economic transformation.
“Ghana needs to persist in its ambitious fiscal consolidation efforts, ensuring that adjustments are both fair and sustainable,” Taliercio stated. He emphasized the importance of protecting investments that benefit the poor and foster growth while also enhancing domestic revenue mobilization. Additionally, he urged the government to tackle increasing fiscal liabilities in the energy and cocoa sectors.
The report revealed that Ghana’s fiscal deficit averaged around 4% of GDP from 2008 to 2019, double that of the previous decade. Total expenditures during this period averaged 19% of GDP, reflecting a significant increase in public spending.
David Elmaleh, Senior Economist and report author, underscored the necessity of strengthening fiscal institutions and enhancing public financial management. He called for the implementation of a fiscal rule to ensure debt sustainability and greater transparency through timely fiscal data.
In the medium term, the report outlines four key policy priorities for Ghana:
- Fiscal Discipline and Oversight: Establish a fiscal rule and improve oversight of contingent liabilities while leveraging technology for enhanced accountability.
- Domestic Revenue Mobilization: Enhance tax administration and broaden the tax base to support development goals sustainably.
- Financing Mix Management: Manage the financing mix to align investment returns with financial costs while clarifying the intended uses of external funds.
- Investment Spending: Prioritize public goods spending on human development and address inefficiencies in investment to support climate resilience and technological innovation.
Tamoya Christie, Senior Economist and co-author of the report, stated, “The report’s recommendations are critical to ensuring Ghana’s fiscal stability and fostering sustainable economic development.” She added that the World Bank Group is prepared to assist Ghana in implementing these strategies for lasting prosperity and resilience.
As Ghana navigates these challenges, the call for comprehensive reforms highlights the urgent need for a sustainable and equitable fiscal policy framework to secure the nation’s economic future.
By: Frank Owusu Obimpeh
