IMF projects significant reduction in Ghana’s fiscal deficit in 2023 and next 5 years

The International Monetary Fund is projecting a significant reduction in Ghana’s fiscal deficit to Gross Domestic Product (GDP) in 2023 and the next five years.

This follows a significant cut in government expenditure and expected improvement in revenue.

According to its October 2023 Fiscal Monitor, the overall fiscal deficit is expected to take a nose dive in 2023, 2025, 2025, 2026, 2027 and 2028.

In 2023, the fiscal deficit-to-GDP ratio is estimated at 4.6% as against 11.2% in 2022.  Before then in 2020 and 2021, the fiscal deficit to GDP was pegged at 17.4% and 12.0% respectively.

It is expected to fall to 4.1% of GDP in 2024 and subsequently to 3.5% of GDP in 2025 and 3.0% of GDP in 2026. It will again decline to 2.6% of GDP in 2027and 2.8% of GDP in 2028.

It indicates that the government adopted a tight budget spending in 2023 as captured by the IMF Programme which stresses more on revenue mobilisation.

This is also a reflection of the country’s second quarter growth rate where some sub-sectors such as Construction (-11.7%) that rely heavily on government spending contracted.

Primary balance estimated at 0.1%

Similarly, the primary balance will fall to 0.5% of GDP, from a deficit of 3.7% in 2022.

However, in the next five years, the primary balance will record a surplus.

This is a result of an anticipated strong revenue growth and reduced expenditure in 2023.