The ISSER warns of worsening poverty levels in Ghana due to slowing growth projected at 4% for 2025. Major factors include reduced capital expenditures, missed revenue targets, and concerns over debt sustainability. Professor Quartey emphasizes the need for disciplined fiscal policies and improved tax compliance to avoid economic distress.
The Institute of Statistical, Social and Economic Research (ISSER) has cautioned that Ghana’s slowing economic growth may exacerbate poverty levels. Although a rebound to 5.7% GDP growth is expected in 2024, projections for 2025 indicate a decrease to 4%. This decline is attributed to reduced capital expenditures, tight fiscal measures, and delays in implementing economic strategies.
Professor Peter Quartey, ISSER Director, highlighted that growth in 2024 is primarily driven by sectors such as ICT, construction, and mining. However, lower capital investment, estimated at 2.5% of GDP, and the slow rollout of the 24-hour economy policy pose challenges for future growth.
The fiscal landscape is grim, as Ghana recorded a fiscal deficit of 7.9% in 2024, significantly exceeding the revised target of 4.2%. Despite attempts to restructure, revenue underperformed at 15.9% of GDP, which was below the anticipated 17.4%.
Quartey expressed concerns regarding debt sustainability, noting a decline in the debt-to-GDP ratio to 61.8%. He stated, “We’re inching towards the IMF’s recommended 55%, but complacency could plunge us back into crisis.” He emphasized that relying on domestic borrowing risks hindering private sector credit access and economic growth.
The government’s ambitious goal to increase income and property tax revenue by 45.4% in 2025 was critiqued by Quartey, who questioned the new strategies to achieve this target. He called for research-based policies and regular evaluations to ensure fiscal transparency and accountability.
He further criticized the accessibility of tax refunds, suggesting that the lack of trust in the refund process undermined tax compliance. Additionally, weak performances in agriculture and industry raised alarms, with agriculture only expecting 3.1% growth in 2025 compared to 2.8% in 2024.
Quartey warned that increasing household tax burdens could exacerbate living cost pressures if not managed properly. He urged for more disciplined fiscal policies, suggesting regular reviews to mitigate potential budgetary crises. “We must stop recycling policies that lack data-driven foundations,” he advised, in order to achieve macroeconomic stability.
The ISSER report underscores a precarious fiscal situation for Ghana, with projected economic growth slowing to 4% in 2025 against rising poverty concerns. With challenges such as missed revenue targets and reliance on domestic borrowing, there is a pressing need for disciplined fiscal policies and effective tax strategies to prevent exacerbating the economic strain on households. Nurting trust in the tax system and improving sectoral strengths are essential for future stability.
Original Source: www.myjoyonline.com
