A 2018 African Economic Outlook report by the African Development Bank (AfDB) has praised Ghana for her high revenue mobilisation and generation as key indicators that could boost the nation’s economic development.
The efficiency of revenue mobilization and generation in achieving the country’s plans and goals for a sustainable fiscal consolidation path must affect the development objectives of the nation.
The report cited the wide budget overrun in 2016 calls for expanding Ghana’s tax base, which is relatively low, with a tax-to-GDP ratio of about 16 percent.
It indicated the need to address the financial sustainability of state-owned energy enterprises as being crucial to the financial well-being of the energy sector, as well as the banking sector, whose nonperforming loans rose sharply to 21.2 percent in June 2017.
The Bank of Ghana (BOG) however has taken footsteps to restore stability to the sector by requesting a recapitalization plan from banks with capital shortfalls, in addition to the implementation of collateral requirements and the development of an Emergency Liquidity Assistance plan.
The reports cited the increased minimum capital requirement of commercial, rural and community banks will strongly pave the way to consolidate and improve the performance of the banking sector.
Towards budget implementation, revenue mobilization and efficiency measures will continue to be key factors of growth to various sectors of the economy.
Ghana’s inflation however continued to gradually drop from a peak of 19.2 percent in January 2016 to 12.2 percent in September 2017, the report said.
Higher oil production and tightly controlled expenditures are likely to boost efficient revenue generation as well as the improvements in tax collection and declining inflation along with interest rates, will facilitate economic activity.
The report indicated the promotion of a private sector-led growth which will provide a key supplement and platform for reviving the nonoil sectors, as well as the links to stimulate production and manufacturing.
It noted ‘’restoring and maintaining a sustainable fiscal and macroeconomic environment, improving the business-enabling environment while strengthening the energy supply for manufacturing and production, and ensuring the energy sector’s financial viability are requisite to enhanced productivity.’’
By Mawuli Yao Ahorlumegah