Ghana’s Deficit in Revenue is Likely to Further Depreciate Following IMF Programme - Dr. Nii Moi Thompson Cautions

An illustrious Ghanaian Economist, Dr. Nii Moi Thompson, has sent a word of caution to the managers of Ghana’s economy stating that, Ghana’s deficit in revenue is likely to further depreciate as the country seeks to implement the International Monetary Fund Programme (IMF).

Dr. Nii Moi Thompson opined that, the fiscal health of Ghana is not healthy looking, adding that the earlier the stakeholders of the economy come together to alleviate the anomalies, the better it will be for the country’s economy.

After a meeting with the Executive board of IMF in June, Ghana is expected to receive a third tranche of $360m after its approval.

In an interview with Channel One TV’s Bernard Avle, Dr. Moi Thomposn posited that, the recent fiscal deficit is as a result of the overburdening of the revenue by the government, adding that the government’s inability to provide adequate credit to businesses has led to a surge in tariffs and a higher cost of doing business, stifling economic growth and development. 

Dr. Moi Thompson stated that, the mismatch in the financial sector may lead to a precarious situation where the government may struggle to pay the salaries of public servants, which will be catastrophic for Ghanaians.

He said, “[Employee compensations, interest payments] It’s one of the biggest structural impediments to fiscal rectitude in Ghana, historically that has been the case. On average, we exceed our wage bill by just about 9% close to 10%, on average. Since 2008, every single year, we have exceeded our wage bill by almost 10%.

“And over that same period on average, we have had revenue shortfalls of around 4%. You see the contradiction emerging, your revenues are falling short in terms of budget, so actual and budget, its falling short by an average of 4%. But you’re exceeding your wage bill by almost 10%, then the third element is a shortfall in capital expenditure, which is also around 4%, so it’s like a perfect storm. You’re not investing enough in your economy, and as a result, you are not collecting enough revenue.

“I see a slight decline in the wage bill for the estimated figures for last year [2022], we don’t have the final. But the others remain the same, revenues continue to fall short. And it will actually get worse as the IMF programme is implemented. Because sources of revenues are business activity growth, and here you are strangulating them. By not giving them credit, raising the cost of doing businesses, tariffs, electricity tariffs and so forth, so we can expect this to get very difficult as we go on,” he reiterated.