The Institute for Fiscal Studies has urged the Ghanaian government to adopt realistic budget targets to enhance fiscal credibility, citing a history of revenue overestimations and emphasizing caution against excessive borrowing. They recommend maintaining low fiscal deficits and exploring resource-driven economic strategies, referencing the success of the Gold Purchase Programme as a means to bolster financial reserves without new debt.
The Institute for Fiscal Studies (IFS) has recommended that the government set practical budget targets to enhance fiscal credibility. They assert that a credible budget is vital for effective financial management and sustaining economic stability. Historically, Ghana has overestimated revenue projections, consistently missing targets and experiencing an average shortfall of 7.4% from 2013 to 2023, diminishing confidence in its financial policies.
Furthermore, the IFS has advised caution against hastily borrowing from international markets, recalling Ghana’s significant debt crises in 2001 and 2022, the latter of which resulted from excessive borrowing and resulted in the loss of access to international bonds. To avert a recurrence of such crises, the institute emphasizes the necessity of maintaining low fiscal deficits and suggests exploring alternative means to stimulate the economy.
The IFS highlights successful initiatives such as the central bank’s Gold Purchase Programme, which demonstrates how Ghana can enhance its financial reserves without incurring further debt. They stress that avoiding excessive foreign borrowing is essential for ensuring long-term economic stability.
In conclusion, the IFS urges the government to adopt realistic budget targets to build fiscal credibility and prevent further economic crises. By avoiding overestimation of revenues and excessive borrowing, while exploring alternative economic enhancements, Ghana can secure its financial stability and reinforce confidence in its fiscal policies.
Original Source: www.gbcghanaonline.com
