Budget 2024: ISSER urges fiscal prudence amid cautious optimism

The Institute of Statistical Social and Economic Research (ISSER) has expressed cautious optimism about the 2024 budget, urging fiscal prudence as the country aims to rebound from ongoing economic woes.

“The year 2024 is a test case – prudent financial management will build on 2023’s stability,” said ISSER’s Director, Prof. Peter Quartey. “Conversely, overspending could spur exchange rate depreciation and inflation.”

The budget puts forth policies to spur growth after a turbulent 2022. However, Prof. Quartey warned revenue targets could be missed as 2023 targets remain in doubt.

“Broadening the tax base to cover the informal sector (60-70 percent of the economy) is needed,” he said.

As spending is set to rise 31 percent in 2024, Prof. Quartey cautioned rationalisation is needed to ensure value. He added that procurement audits could “save billions of cedis”.

“Over-reliance on imports means creating foreign jobs,” Prof. Quartey said – noting import exposure leaves Ghana vulnerable to external shocks.

Proposed tax reliefs on items like sanitary pads are welcome, but require monitoring to prevent abuse and ensure prudent use of state resources.

On the bright side, tourism looks set for more investment after strong 2023 returns. Tourist spending averaged US$2,700 over 10-14 days at sites like the Kwame Nkrumah Museum, Prof. Quartey noted.

However, the heavy burden of debt payments remains a concern.

“Interest payments are likely to rise 60.3 percent in 2024,” Quartey said.

With over 90 percent of domestic revenue going to interest, compensation and statutory payments, Prof. Quartey said, little is left for infrastructure and services – necessitating continued deficit financing.

While 2023 growth is projected around 3 percent Prof. Quartey reiterated “8-10 percent is needed” to curb Ghana’s high multidimensional poverty.