IFS: Ghana has poor track record of delivering credible budgets

The Institute for Fiscal Studies (IFS) has raised concerns over the Government of Ghana’s poor track record in delivering credible budgets, citing persistent overestimation of revenues.

According to the economic think tank, budget statements over the years have routinely featured inflated revenue projections, a trend the IFS has consistently highlighted.

In its assessment of the 2025 Budget expectations, the IFS noted that from 2013 to 2023, actual total revenue and grants fell short of budget targets every year, with an average deviation of -7.4%.

“Effective fiscal policy rests, among others, on credible budgets. If a budget lacks credibility, its policy intentions are less likely to be achieved. Where this is a chronic challenge, it is likely to reduce confidence in fiscal policy, undercutting its effectiveness,” the IFS stated.

The organization stressed that a crucial element of budget credibility is setting realistic revenue targets, as revenue forms the foundation of any budget.

Analyzing Ghana’s performance under the Public Expenditure and Accountability (PEFA) framework—a globally recognized standard for evaluating public financial management—the IFS observed that the country’s annual revenue deviation met the ideal range of -3% to +6% in only two out of the 11 years reviewed (2013–2023).

“In fact, Ghana’s average revenue deviation of -7.4% is more than twice the lower limit of the range of -3%, implying under-collection of revenue below the threshold,” the IFS emphasized.

To enhance budget credibility, the think tank urged the Ministry of Finance to adopt more realistic revenue projections.

Recommended measures include reviewing the Ministry’s macro-fiscal forecasting framework to eliminate optimism bias, strengthening data and analysis for estimating the revenue impact of new tax policies, and involving independent experts to evaluate and advise on revenue forecasts.

SOURCE: DAILY MAIL GH

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