The World Bank’s report reveals that Ghana’s economic growth from 2008 to 2019, largely fueled by oil, has rendered the nation vulnerable to global economic shocks due to rising debt levels and inadequate fiscal controls. Structural reforms are essential for addressing these challenges and ensuring a sustainable economic future.
A World Bank report has highlighted that Ghana’s economic growth between 2008 and 2019, primarily driven by its oil sector, has exposed the nation to global economic vulnerabilities. This period of expansion coincided with significant debt accumulation, leading to increased exposure to external financial shocks. Furthermore, the report called for structural reforms to fortify economic stability, which must focus on the underlying causes of current fiscal challenges.
Specific issues contributing to Ghana’s economic difficulties include inadequate expenditure controls, ineffective public spending, and underachieving revenue collections. Furthermore, high levels of borrowing have only intensified the situation, necessitating urgent remedial actions. During 2008-2019, Ghana’s average fiscal deficit stood at approximately 4% of GDP, doubling the previously recorded average from 2000 to 2007.
Expenditure levels also rose significantly to an average of 19% of GDP, reflecting a six-percentage-point increase compared to earlier years. Robert Taliercio, the World Bank Country Director for Ghana, stressed the importance of ongoing fiscal consolidation strategies. He stated that these strategies must be both equitable and sustainable to lead Ghana towards a resilient economic future.
Taliercio remarked on the necessity to protect investments that favor low-income groups while enhancing local revenue generation efforts. Moreover, addressing the fiscal liabilities arising from sectors like energy and cocoa is critical for long-term sustainability. The report reinforces the idea that Ghana’s impressive GDP growth of 6.8% per annum during 2008-2019 was achieved at the expense of escalating debt levels.
To safeguard against future economic shocks, the World Bank report advocates for improved controls on expenditures, better revenue collection mechanisms, and more efficient allocation of public spending resources. These measures will help solidify Ghana’s economic foundation and reduce reliance on volatile external factors, ultimately fostering a more stable fiscal environment.
The World Bank’s analysis of Ghana’s economy underscores the pressing need for reforms to achieve fiscal stability. The country must address deficiencies in expenditure control, public spending efficiency, and revenue collection. Without these reforms, Ghana risks continued vulnerability to global economic fluctuations, despite prior gains in GDP growth driven by the oil sector.
Original Source: www.gbcghanaonline.com
