The Institute of Statistical, Social and Economic Research (ISSER) has disclosed that next year, every 32 pesewas of ¢1 of domestic revenue will be allocated to servicing the country’s debt, constituting 32% of domestic revenue.
This figure represents a decrease from the ¢0.56 of ¢1 of domestic revenue spent on debt servicing in 2022.
ISSER has advised the government to minimize future borrowing in order to reduce the budget deficit. High deficits can result in increased borrowing, and a surge in debt servicing can constrain fiscal space for capital expenditure.
In its analysis of the impact of the 2024 Budget on the private sector, ISSER noted a marginal indication for fiscal consolidation in spending, with limited changes between 2023 and 2024 revenue targets. The institute expressed concern about the potential crowding out of the private sector and called for zero financing of the budget by the Bank of Ghana in 2024.
The overall fiscal balance (commitment) is projected to be 4.8% of Gross Domestic Product in 2024, compared to 5.9% for 2023. The primary balance (commitment) is anticipated to be at a surplus of 0.5% of GDP in 2024, as opposed to 0.7% in 2023.
ISSER emphasized that achieving the 2024 targeted fiscal balance would send a positive signal about the potential to break the infamous Political Business Cycle.
On expenditure measures, ISSER recommended the alignment of quarterly budget allotment with cash flow forecasts, tightening the use of allotments as controls on the Ghana Integrated Financial Management System (GIFMIS), and standardizing public works contracts. It also proposed a strict application of Sections 96 to 98 of the Public Financial Management Act by all Principal Spending Officers and the establishment of a compliance desk to track tender advertisements from Covered Entities, complemented by regular procurement audits.