The ISSER warns that Ghana’s economic growth may decelerate to 4% in 2025, raising concerns about poverty levels and fiscal sustainability. Key factors contributing to this decline include reduced investments and missed revenue targets. The ISSER advocates for disciplined fiscal measures and data-driven policies to strengthen macroeconomic stability.
The Institute of Statistical, Social and Economic Research (ISSER) has alerted stakeholders that the economic outlook for Ghana is fraught with challenges that may exacerbate poverty levels. The anticipated economic growth, projected at 5.7% for 2024, is expected to decelerate to 4% in 2025, which falls below the Sub-Saharan Africa average of 4.2%. This decline is mainly attributed to reduced capital expenditure, stringent fiscal policies, and delays in new economic initiatives.
Professor Peter Quartey, the ISSER Director, pointed out significant concerns regarding the country’s fiscal stability and missed targets for the fiscal year 2024, which saw a deficit of 7.9% compared to a revised target of 4.2%. The underperformance in revenue collection, recorded at 15.9% of GDP against the expected 17.4%, alongside higher-than-anticipated expenditures, poses a risk to Ghana’s economic recovery.
The debt sustainability challenge continues, with the debt-to-GDP ratio currently at 61.8%. Despite some improvements due to restructuring efforts, Professor Quartey warned against complacency, which could lead to adverse consequences. He emphasized the potential threats posed by the government’s reliance on domestic borrowing that could impede private sector credit access and stifle overall economic growth.
Moreover, the ISSER Director criticized the government’s ambitious target of a 45.4% increase in income and property tax revenue for 2025, questioning the strategies to achieve this goal. He acknowledged attempts to leverage digital technologies for tax compliance but insisted on the necessity of data-driven policies along with mid-year reviews to avoid revenue shortfalls.
Concerns regarding the broader economic impact were expressed, particularly as key sectors such as agriculture and industry show signs of decline. These trends could significantly affect households, leading to reduced job opportunities and increased pressures on living costs, especially amidst the government’s aggressive domestic revenue initiatives. Professor Quartey advised stricter compliance with fiscal responsibility laws and periodic progress assessments to enhance financial stability.
In conclusion, Ghana faces notable economic challenges as it grapples with slowing growth projections and significant fiscal deficits. The ISSER emphasizes the need for careful fiscal management to avert deeper economic distress and mitigate poverty. The call for evidence-based policymaking and responsible borrowing practices underscores the urgency of maintaining economic stability, particularly as vulnerable sectors continue to experience pressures that could impact household finances.
Original Source: www.myjoyonline.com
