The total government’s expenditure for 2020 increased by 31.5% to hit a record of GHc92.2 billion. According to the research arm of the international rating agency, Fitch, the large expenditures resulted due to greater costs to cater for covid-19. Since the first case of Covid-19, the Ghanaian government started offering support to the less fortunate in form of subsidies.
In case the increasing expenditures are not controlled they might crowd out the private sector borrowing and even interfere with interest rates. The sharp ramp-up in fiscal deficits and debt loads in 2020 will make Ghana major in fiscal consolidation.
The research arm of the international rating agency report, “A robust cyclical recovery in revenues will allow milder fiscal adjustment efforts in Ghana, but we still forecast low spending growth of 6.2% in 2021. After committing more than GHc11.2 billion (3.1% GDP) to mitigate the impact of Covid-19 in 2020, the government has announced plans to cut spending on procurement, with a view to gradually stabilizing the fiscal deficit and public debt, which we expect reached a two-decade high 72.5% of GDP in 2020.”