IFS calls for reforms in 2027 budget to boost domestic revenue mobilisation

The Institute for Fiscal Studies (IFS) has cautioned that Ghana's limited domestic revenue collection is impeding the nation's ability to fund essential infrastructure, bolster public sector salaries, and hasten national progress. At a pre-budget press conference, IFS Executive Director Dr Said Boakye highlighted how these challenges have led to continuous borrowing for development initiatives, subpar infrastructure, and diminished national earnings.

He pointed out that Ghana's GDP per capita was $2,419 in 2024, underscoring the broader economic hurdles the country confronts. The IFS points to low revenue generation from extractive industries, revenue losses, and extensive tax breaks as key factors restricting the country's capability to harness domestic resources. Dr Boakye contends that Ghana is not fully capitalizing on its mineral wealth, especially in comparison to nations like Botswana, where the government plays a significant role in the mining sector and reaps rewards from royalties and dividends.

Consequently, the IFS is advocating for Ghana to contemplate more effective revenue-sharing arrangements and increase its stake in the extractive industry to amplify gains from the country's natural resources. Additionally, the Institute is expressing concerns over revenue losses due to tax avoidance, under-declaration, and corruption, stressing that these activities continually rob the state of the funds necessary for development.

Furthermore, the IFS warns that an overdependence on tax exemptions as a means to lure foreign investment may be eroding the country's revenue foundation. Consequently, the IFS is advocating for a reassessment of current tax exemptions to guarantee they yield the intended economic advantages without unduly diminishing government income.

The Institute is convinced that tackling these fundamental weaknesses is vital to fortifying domestic revenue collection, diminishing reliance on borrowing, and furnishing the fiscal space essential to fulfill Ghana's developmental objectives.