In a push to create fiscal space, the World Bank has called on the government to take decisive action in reducing subsidies in certain sectors of the economy.

However, the bank emphasized the importance of conducting a comprehensive economic and social analysis before implementing subsidy reforms, to ensure that their removal does not disproportionately affect jobs and the livelihoods of vulnerable groups.

Managing Director of Operations at the World Bank, Anna Bjerde, explained that subsidies not properly targeted impose a burden on the national budget and limit the government's ability to allocate resources for critical investments.

"It is much better to have targeted subsidy regimes that protect those who truly need assistance, rather than relying on general subsidies as a rule of thumb. The recommendation is to identify where subsidies exist and gradually reduce them in a responsible manner, commensurate with the necessary adjustments," Bjerde stated.

The call from Ms. Bjerde aligns with a recent World Bank report, "Detox development: Re-purposing environmentally harmful subsidies," which revealed that globally, trillions of dollars are spent on inefficient subsidies in sectors such as agriculture, fishing, and fuel.

The report emphasized that these subsidies are counterproductive, as they contribute to environmental pollution.

Since the implementation of the Planting for Food and Jobs (PFJ) policy in 2017, the Ghanaian government has dedicated significant funds to provide subsidized seedlings and fertilizers to farmers.

Last year, Finance Minister Ken Ofori-Atta disclosed that the government spent GH¢2.47 billion on the PFJ program between 2017 and 2021.

With the expenditure of GH¢614 million in 2022 and GH¢660 million in 2023, the total subsidy expenditure now stands at GH¢3.74 billion.

When asked about Ghana's subsidy administration, Ms. Bjerde acknowledged that the decision to remove subsidies is a challenging one but emphasized its importance.

The World Bank Country Director for Ghana, Liberia, and Sierra Leone, Pierre Laporte, aslo expressed the bank's commitment to providing technical support to the government in removing subsidies in the agriculture sector.

Laporte stated that the bank's active portfolio in Ghana amounts to $3.6 billion, underscoring its dedication to helping the country overcome economic challenges.

Additionally, Laporte emphasized the need for the government to review its high tax exemption regime to generate the necessary revenue for accelerated development.

The World Bank is currently working on a budget support package of around $300 million, expected to be approved by the end of the year, to assist Ghana's economic reform program.

They also anticipate financial sector support cooperation of $250 million before year-end, demonstrating their commitment to supporting Ghana in addressing its current challenges and advancing its economic growth.