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

The Institute for Fiscal Studies (IFS) is warning that Ghana’s weak domestic revenue mobilisation is undermining the country’s capacity to finance critical infrastructure, improve public sector wages and accelerate national development.

Speaking at a pre-budget press conference, Executive Director of the Institute, Dr Said Boakye, said the country’s revenue mobilisation challenges have contributed to persistent borrowing for development projects, poor infrastructure and low national income.

He noted that Ghana’s GDP per capita stood at 2,419 dollars in 2024, reflecting the broader development challenges facing the country.

The Institute identifies low revenue generation from the extractive sector, revenue leakages and excessive tax exemptions as some of the major factors limiting the country’s ability to mobilise domestic resources.

Dr Boakye argues that Ghana is not maximising the financial benefits from its mineral resources, particularly when compared with countries such as Botswana, where government has significant involvement in the mining sector and benefits from royalties and dividends.

He is therefore urging government to consider more productive sharing agreements and increase its participation in the extractive sector to secure better returns from the country’s natural resources.

The Institute is also raising concerns about revenue leakages resulting from tax evasion, under-reporting and corruption, warning that these practices continue to deprive the state of funds needed for development.

It further cautions that excessive reliance on tax exemptions as an incentive to attract foreign investment could be weakening the country’s revenue base.

The IFS is consequently calling for a review of existing tax exemptions to ensure they deliver the intended economic benefits without unnecessarily reducing government revenue.

The Institute believes that addressing these structural weaknesses will be critical to strengthening domestic revenue mobilisation, reducing dependence on borrowing and creating the fiscal space required to support Ghana’s development priorities.

Source: Jessie Eyram Agbakpo

Radio1 Online