Ghana is currently facing three critical economic challenges, namely a slowdown of economic growth, rising unemployment and a surging public debt. The broad agenda of the government in 2018 is to guide the economy to grow and create more job opportunities to deal with the surging unemployment by revers- ing the abysmal performance of the agriculture sector and reviving the ailing manufacturing sub-sector. This is to be achieved by a number of flagship programs and projects. The government also plans to reduce the country’s fiscal deficit in 2018 and over the medium term to bring the public debt on a declining path to eliminate the risk of debt distress and strengthen the country’s debt sustainability. The budget appears well conceptualized, seeking to achieve a prudent compromise between fiscal consolidation and the acceleration of the country’s economic growth, rising unemployment and unsustainable public debt. Details of some of the policies and programs, however, are yet to be revealed, making their ability to fully address the challeges difficult to establish.
It is the view of the IFS that the future prosperity of Ghana requires a faster economic growth that will create more jobs and a sustainable fiscal plan that will halt the rising public debt and bring its trajectory down over the medium term. Pursuing the three goals of growth, job creation and debt sustainability is possible, provided the ongoing fiscal adjustment is sustained as part of a credible multi-year fiscal plan that seeks to change the government’s expenditure composition by reducing current outlays and increasing investment spending and enhance revenue mobilization through a movement away from direct to indirect taxation. The fiscal adjustment must also be part of wider structural reforms that support economic growth. This, howev- er, will require a bi-partisan cooperation because of the nature of the multi-party environment in which we find ourselves today.
Read full paper here: Occasional No 13new