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The World Bank has cautioned that ongoing tensions in the Middle East could potentially disrupt the Ghanaian economy. While Ghana's position as an oil producer and a significant gold exporter may provide some protection, the report from the Bretton Woods institution suggests that prolonged global trade disruptions stemming from the conflict could negatively impact macro-financial stability.

According to the World Bank's 10th Ghana Economic Update Report, Ghana is projected to achieve a growth rate of 4.8% by the end of 2025. The bank acknowledges that the medium-term outlook is generally positive, but it expects growth to slow down over time. However, the bank cautions that these projections, though achievable, are not guaranteed, and there are significant risks that could tilt the outlook to the downside.

The primary concerns identified by the World Bank include gold price volatility, geoeconomic fragmentation, and the Middle East conflict, which increases energy, food, and agricultural input costs. These factors could weigh on potential growth, reduce fiscal revenues, and contribute to inflationary pressures and currency depreciation.

The bank also highlights the risks associated with policy slippages in the energy and cocoa sectors, as well as the fiscal pressures resulting from ongoing temporary relief measures, such as fuel price interventions. These issues could undermine the gains made in recent years and jeopardize debt sustainability objectives. Additionally, the bank warns that increasing debt service payments in 2027-2028 could pose rollover risks due to the reliance on short-term debt instruments.

To address these risks, the World Bank proposes several policy recommendations. Firstly, it emphasizes the importance of revenue-led fiscal consolidation, arguing that the domestic revenue mobilization agenda is crucial for fiscal sustainability. The bank points out that achieving the primary surplus has largely been through underspending rather than broad-based revenue growth.

Therefore, the priority is to broaden the tax base, improve compliance, and establish a tax administration system capable of capturing revenues from all segments of the economy fairly and equitably.

Secondly, the bank stresses the need for improved expenditure quality. It calls for policy actions in 2025 to get fiscal consolidation back on track, including amendments to the Public Financial Management (PFM) and Public Procurement Acts to strengthen commitment controls and prevent future slippages. However, the World Bank warns that continued cuts to capital investment, infrastructure maintenance, and social transfers could erode the medium-term foundations of the recovery.

The bank insists that prioritizing high-return public investment, preserving priority social spending, and strengthening PFM to improve efficiency is essential. It highlights that fiscal discipline and growth-supportive expenditure are complementary and not competing objectives.