The Bank of Ghana (“BOG”) has urged the Government to use the 2022 budget to reset Ghana’s fiscal policy. According to the Governor of BOG, an improved fiscal consolidation will help reduce the cost of credit in the country and ensure financial stability. It would also create a credible path towards medium-term fiscal sustainability.
The 2021 budget had a total revenue target of approximately GHS 72 billion and an expenditure of approximately GHS 113 billion. According to the 2021 mid-year budget presentation, however, some revisions in Government’s fiscal operations are expected to reduce the fiscal deficit on a cash basis to GHS 41, 273 million, down from the original deficit target of GHS 41, 298 million. Foreign and domestic sources are expected to finance this deficit. However, with prevalent interest rates in these uncertain times, the likely result is a further deficit plunge.
It is hoped that the 2022 budget would aim at fiscal consolidation to bridge the gap between expenditure and revenue, and eventually reduce borrowing.