ISSER anticipates reduction in domestic revenue for debt servicing
The amount of money Ghana spends from its domestic revenue to service its debt is expected to reduce drastically from next year.
For instance, it is anticipated that in 2024, Ghana will allocate 32 per cent of its domestic revenue, or 32 pesewas of GH¢1, to debt servicing—an improvement from the 56 pesewas in 2022.
According to report by the Institute of Statistical, Social and Economic Research (ISSER), this decline is indicative of a strategic move towards fiscal prudence, according to ISSER.
However, even with this reduction, ISSER emphasizes the imperative for the government to curtail borrowing, underscoring that a high deficit could potentially constrict essential capital expenditure due to heightened debt-servicing obligations.
The intricacies of this delicate balancing act are underscored by ISSER’s projections, indicating that in 2024, the fiscal balance target stands at 4.8 per cent, down from the 5.9 per cent recorded in 2023.
This shift signifies a strategic trajectory towards breaking the notorious Political Business Cycle.
In terms of primary balance commitment, ISSER foresees a surplus of 0.5 per cent of GDP for 2024, a slight decrease from the 0.7 per cent recorded in 2023. This surplus underscores ongoing efforts towards fiscal consolidation, aligning with broader economic objectives.
The Institute contends that achieving the targeted fiscal balance for 2024 will serve as a pivotal indicator of the government’s potential to disrupt established political-economic cycles.
ISSER also scrutinizes expenditure measures, advocating for meticulous alignment of quarterly budget allotments with cash flow forecasts. Additionally, it calls for stringent controls on the Ghana Integrated Financial Management System (GIFMIS) and the standardization of public works contracts.
The proposal includes the strict application of Sections 96 to 98 of the Public Financial Management Act, along with the establishment of a compliance desk to monitor tender advertisements from Covered Entities.
ISSER asserts that these measures, complemented by regular procurement audits, can fortify financial governance and foster economic resilience.
In the broader context, ISSER expresses concern about the potential crowding out of the private sector and urges a departure from financing the budget by the Bank of Ghana in 2024. This plea aligns with a broader vision of fostering an environment conducive to private sector growth and innovation.
Overall, the 2024 fiscal landscape in Ghana, as scrutinized by ISSER, reveals a delicate balance between debt management, fiscal consolidation, and private sector considerations.
The nuanced analysis underscores the imperative for the government to navigate these challenges with strategic precision to foster economic resilience and sustainable growth.