Databank Research has forecasted that Ghana’s fiscal deficit to Gross Domestic Product (GDP) ratio is anticipated to narrow to 4.5% ± 50 basis points in 2024. The positive outlook is attributed to potential interest savings resulting from the external debt restructuring, despite concerns about election-induced fiscal overruns.
As of September 2023, the Bank of Ghana reported the country’s fiscal deficit to be 2.5% of GDP. However, Databank Research, in its 2024 Quarterly Report, emphasized that the expected interest savings from the external debt restructuring could contribute significantly to improving the fiscal balance.
The government, in its 2024 budget, allocated GH¢19.04 billion for external interest payments, taking into account the ongoing negotiations with various creditor groups that led to a temporary halt in debt service.
Databank Research expressed optimism about the government securing interest savings once the restructuring deals are concluded. “We believe the government could secure interest savings after concluding restructuring deals, which could improve the fiscal balance,” the report noted.
In 2024, the government has outlined plans to spend GH¢55.93 billion on interest payments, while GH¢63.8 billion is earmarked for the compensation of employees. The overall expenditure for the year is projected to be GH¢226.68 billion.
On the revenue side, the government aims to mobilize GH¢176.41 billion, with GH¢173 billion expected to come from domestic revenue sources. These figures highlight the government’s commitment to managing its fiscal position and ensuring a balance between expenditures and revenue generation.
While the fiscal deficit is predicted to narrow, concerns linger regarding potential fiscal overruns associated with elections. As the country navigates through these economic challenges, stakeholders will closely monitor the government’s fiscal policies and their impact on overall economic stability.
As the external debt restructuring negotiations progress, market analysts and policymakers will be keenly watching for further developments that could shape Ghana’s economic landscape in the coming months.