Ghana’s economic woes may deepen due to domestic budget financing – IFS predicts

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The Institute for Fiscal Studies (IFS) has warned that Ghana’s economic challenges will worsen if the country continues to rely on domestic financing for its national budget.

IFS highlighted that the government’s inability to access the Eurobond market has led to increased competition with the private sector for loans, potentially resulting in a shortage of investible funds for private businesses.

During a press briefing on Ghana’s current fiscal and macroeconomic performance, Dr. Said Boakye, the Acting Executive Director of IFS, urged the adoption of robust measures to stimulate economic growth.

“The heightened domestic financing of the national budget that is currently taking place due to the country’s inability to access the Eurobond market owing to the death crisis is a cause for concern. The reason is that by this, the government is more aggressively competing with the domestic private sector for loanable funds,” he noted.

Dr. Boakye added: “This is likely to lead to a shortage of investible funds for the private sector and thus sustain a high interest rate, both of which have the effect of prolonging the current low economic growth and elevated unemployment rates.

“This calls for deliberate measures to tackle negative physical fundamentals like low revenue generation, excessive fiscal rigidities, corruption, and political-induced decisions. ”

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