While the headlines on Ghana’s 2015 budget focus on the short-term impacts of fiscal tightening, the proposed changes should have a positive bearing on the overall economy over time.
The budget deficit has grown rapidly in recent years, after reaching a low of 4.3% in 2011. Combined with a shortfall in the current account of 12% of GDP, the twin deficits have raised concerns over the country’s outlook. However, the 2015 budget is seen by many as a sign that longer-term solutions, in the form of structural reforms, are being sought as a means of tackling deficit and rising debt.
The budget, which was unveiled by Finance Minister Seth Terkper on November 19, aims to reduce Ghana’s fiscal deficit to 6.5% of GDP next year from a projected 9.6% in 2014. Growth, however, is forecast at a more modest 3.9% for 2015, down from 6.9% this year, according to government figures.
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