The Institute of Fiscal Studies (IFS) has described the Ghanaian economy as still weak and fragile, contradicting the government’s claims of economic recovery. Despite assertions by the government that the economy has turned a corner, as highlighted in its mid-year budget review, the IFS argues that the country remains in an unstable macroeconomic environment.
In his presentation of the mid-year budget review last month, Finance Minister Mohammed Amin Adam pointed to a slowdown in inflation and a reduction in the deficit, among other key economic indicators, as signs of economic recovery. However, the IFS has challenged these claims, maintaining that the economy is still in a precarious state.
During a press conference on Ghana’s current fiscal and macroeconomic performance, the Executive Director of the IFS, Dr. Said Boakye, argued that while some economic indicators have improved, they are still worse than historical averages and lag behind those of Ghana’s peers on the African continent.
“Even though Ghana is far from being an ideal country regarding inflation rates, a country that has enjoyed single-digit inflation rates for 31 consecutive months from June 2010 to December 2012, averaging 9.0%, or even an average annual inflation rate of 11.8% from 2010 to 2021, must see an inflation rate of 22.8% as of June 2024 to be dangerously high,” Dr. Said Boakye noted.
The IFS also criticized the government’s revised revenue targets, describing them as overly ambitious and unrealistic. Dr. Boakye pointed out that despite the optimism shown by the Finance Minister regarding revenue mobilization in the 2024 Mid-Year Fiscal Policy Review, the data indicates that revenue mobilization remains a significant challenge for the government.
“The revised 2024 total revenue and grants target of 17.4% of GDP is, indeed, out of sync with reality and is thus not achievable,” he emphasized.
The IFS further urged the government to prioritize fiscal prudence over political power in its campaign policy messaging and to rein in expenditure, particularly in light of the upcoming elections.
