Despite the government’s fiscal consolidation efforts, Fitch Solutions is forecasting Ghana’s fiscal deficit to Gross Domestic Product (GDP) ratio in 2022 at 9.8%.

This is in line with the IMF forecast of 9.8% for this year, but far wider than the government’s target of 7.4% of GDP.

Speaking at the recent Sub Saharan African Update, Country Risk Analyst at Fitch Solutions, Ben Weaver, said the high financing gap will constrain growth.

“Looking into Ghana’s fiscal position following increased spending on health and household support due to COVID-19 pandemic, Ghana’s fiscal deficit widen to an estimated to 11.3% in 2021. This is well above historical level”.

“Despite the fiscal consolidation efforts, we forecast that the country will record a fiscal deficit of 9.8% of GDP in 2022, which is well above the government’s target of 7.4%.”

The International Monetary Fund in its April 2022 Fiscal Monitor Report, projected Ghana’s tax revenue to GDP ratio to increase in 2022 to 16.5%, from 14.7% in 2021. This will be a vast improvement compared to the rates registered during the last 10 years.  

In 2023 and 2024, the country’s tax-to-GDP ratio will however fall to 16% and 16.2% respectively, it added.

The Fund also said government expenditure will decline to 25.2% of GDP in 2022, from 26.3% recorded in 2021. This is expected to put the fiscal deficit to GDP ratio at 9.8%.

However, in 2023 and 2024, the Fund is forecasting expenditure-to-GDP ratio of 25.2% and 23.9% respectively.