The World Bank has emphasized the need for Ghana to adopt a more effective approach to revenue mobilization by broadening its tax base and implementing efficient tax policies.

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The government of Ghana has announced its decision to abolish draconian taxes such as the Electronic Transfer Levy, betting tax, among others and focus on addressing the issue of tax compliance to increase tax revenue to 16% of GDP.

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In its latest Public Finance Review report, titled “Building the Foundations for a Resilient and Equitable Fiscal Policy,” the World Bank highlighted critical areas requiring urgent reform to ensure sustainable economic stability.

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According to Robert Taliercio, the World Bank Country Director for Ghana, Liberia, and Sierra Leone, Ghana must focus on fair and sustainable fiscal adjustments while protecting key social and economic investments.

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“Ghana needs to persist in its ambitious fiscal consolidation efforts, ensuring that adjustments are both fair and sustainable,” he stated. “It is crucial to protect pro-poor and pro-growth investment while enhancing domestic revenue mobilization. Additionally, Ghana must address the increasing fiscal liabilities stemming from the energy and cocoa sector.”

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The World Bank outlined four high-level policy priorities Ghana must implement to strengthen its fiscal system:

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Strengthening Fiscal Discipline and Transparency

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The report recommends that Ghana enforce a fiscal rule to limit procyclical spending while ensuring better expenditure controls and oversight of liabilities. It suggests replacing the current fiscal balance rules with a combination of “an expenditure and a debt rule (with well-defined escape clauses and limits on external borrowing).” Additionally, it advises granting institutional independence to the fiscal council and improving transparency through engagement with Parliament, civil society organizations, and the media.

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Improving Public Financial Management (PFM)

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To enhance fiscal discipline, the World Bank stresses the need for structural reforms in budget preparation and execution. The report calls for “improving the budget preparation process to enhance its credibility, strengthening commitment controls and cash management (notably by expanding the scope of the GIFMIS and the TSA) to improve budget execution.” It also recommends leveraging technology to boost transparency and trust in government operations.

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Containing Contingent Liabilities and Rigid Expenditures

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The report highlights the risks associated with unchecked public spending, particularly in the energy and cocoa sectors. It calls for deepened reforms in these areas to limit fiscal liabilities. Among the measures suggested are “reducing rigid expenditures by containing the public sector wage bill, rationalizing public spending on goods and services, and limiting transfers to government units.”

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Expanding Domestic Revenue Mobilization (DRM)

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To reduce reliance on external financing, Ghana must pursue equitable and sustainable revenue generation strategies. The World Bank underscores the importance of operationalizing the country's Medium-Term Revenue Strategy (MTRS) and implementing key tax reforms, including “removing VAT exemptions, reforming the CIT by phasing out tax holidays and exemptions, and strengthening safeguards against profit-shifting.” The report also urges enhanced oversight of tax expenditures to ensure transparency and efficiency.

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The World Bank advises Ghana to ring-fence investments in sectors that drive human development, economic transformation, and climate resilience.

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Human Capital Development: Protecting funding for primary education, healthcare, and social assistance programs like LEAP.

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Agricultural Transformation: Increasing capital expenditures, improving monitoring of government spending in the sector, and ensuring the profitability and transparency of the cocoa industry.

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Economic Infrastructure: Enhancing transport networks, ICT infrastructure, and urban planning to facilitate trade and economic growth.

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Climate Resilience: Investing in cost-effective climate solutions that provide both environmental and economic benefits, such as improved water management and low-carbon energy initiatives.

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The report concludes that Ghana’s long-term economic recovery hinges on bold policy reforms, efficient spending controls, and a modernized revenue collection system.

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World Bank Ghana Public Finance ReviewDownload

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