- IFS warns Ghana's economy will worsen with continued domestic budget financing.
- Government's Eurobond market exclusion sparks loan competition with private sector.
- IFS urges measures to address revenue, fiscal, and corruption challenges.
- Ghana's economic growth and unemployment rates require comprehensive solutions.
The Institute for Fiscal Studies (IFS) has warned that Ghana’s economic challenges will worsen if the country continues to rely on domestic financing of the national budget. According to the IFS, the government’s inability to access the Eurobond market has led to increased competition with the private sector for loans to fund the budget.
This competition for loanable funds is likely to result in a shortage of investible funds for the private sector, further exacerbating the country’s economic woes. Speaking at a press briefing, Dr. Said Boakye, Acting Executive Director of IFS, emphasized the need for resilient measures to drive economic growth.
Dr. Boakye noted that the heightened domestic financing of the national budget is a cause for concern, as it leads to aggressive competition with the domestic private sector for loanable funds. This competition will likely lead to a shortage of investible funds for the private sector, sustaining high interest rates and prolonging low economic growth and elevated unemployment rates.
The IFS has called for deliberate measures to address negative physical fundamentals, including low revenue generation, excessive fiscal rigidities, corruption, and political-induced decisions. Dr. Boakye emphasized the need for a comprehensive approach to tackle these challenges and ensure sustainable economic growth.
The IFS warning comes as Ghana’s economy continues to face significant challenges, including a heavy debt burden and a struggling private sector. The government has been urged to explore alternative financing options and implement policies to stimulate economic growth and reduce unemployment.
