Government’s fiscal adjustment on track – Report

The Ghana Government’s fiscal adjustment is on track with some better-than-expected outcomes, IC Research has revealed.

In the 2023 Budget, the authorities signaled a planned fiscal adjustment equivalent to 3.8% of Gross Domestic Product with the target primary deficit (on commitment basis) at 0.5% of GDP.

However, the 2023 fiscal performance revealed a stronger-than-programmed outcome with the primary balance posting a surplus of 0.4% against the 0.5% target deficit.

IC Research said this translates into a strong fiscal adjustment equivalent to 4.7% of GDP in 2023 in its estimation. As such this puts the authorities ahead of the programme objective given that the 3-year programme anticipated a cumulative adjustment of 5.1%.

“The IMF statement confirmed that the primary fiscal balance (on commitment basis) improved by over 4.0pp of GDP in 2023 and is on track to record a primary surplus of 0.5% in 2024. In our view, this outcome will achieve the cumulative adjustment of 5.1% by end-2024 with one full year of the programme remaining to run”, it mentioned.

Subject to election-related shocks, the research firm said this better-than-expected outcome leaves room for the authorities to widen the primary surplus in the final year of the programme, and firmly place the public debt ratios on a downward path in the medium-term.