IFS Warns Revenue Crisis Undermining Development, Urges Sweeping Reforms in 2027 Budget

Ghana’s failure to mobilise domestic revenue is depriving the state of billions of dollars annually and undermining its ability to finance infrastructure, pay public sector workers competitively, and accelerate national development, the Institute for Fiscal Studies (IFS) has warned, calling for fundamental reforms in the 2027 budget.

Speaking at a pre-budget press conference in Accra on Thursday, IFS Executive Director Dr Said Boakye identified three structural constraints choking the country’s revenue base: low returns from the extractive sector, pervasive revenue leakages, and excessive tax exemptions that erode the tax base without delivering commensurate economic benefits .

The intervention comes just days before Finance Minister Dr Cassiel Ato Forson is scheduled to present the 2027 Budget Statement to Parliament on November 12, a budget the government has framed as a pivot from macroeconomic stabilisation toward its “New Economy” agenda .

A Revenue Gap Worth Billions

The IFS painted a stark picture of Ghana’s revenue underperformance. Total revenue and grants amounted to just 15.7 per cent of GDP in 2022, ranking Ghana 18th among 25 Sub-Saharan African countries surveyed, against a regional average of 20.1 per cent .

Applying that benchmark to 2025 figures, the Institute estimated that Ghana’s total revenue and grants of GH¢224.88 billion could have reached GH¢288.26 billion had the country performed at the regional average—a shortfall equivalent to approximately US$5.05 billion .

“The direct implication of the low total revenue and grants to GDP ratio is that the government of Ghana is actually collecting revenues in monetary terms far below its potential,” Dr Boakye said .

The Botswana Comparison

On the extractive sector, the IFS challenged the conventional wisdom that Ghana is maximising returns from its mineral wealth. Between 2019 and 2023, Ghana’s mining revenue as a proportion of mining value added averaged just 15 per cent, compared with 60.9 per cent in Botswana over the same period .

In 2025, Ghana’s mining value added was estimated at US1.60 billion—11.9 per cent of value added. Had Ghana captured Botswana’s average ratio, mining revenue would have reached an estimated US6.56 billion above the actual figure .

The IFS urged government to consider direct state investment in the extractive sector or, where that is impractical, production-sharing arrangements that secure a greater national share of resource value. It suggested redirecting resources from certain traditional infrastructure projects toward strategic investments in mining .

Leakages and the Carrot-and-Stick Approach

On revenue leakages, the Institute pointed to the April 2026 disclosure by Ghana Revenue Authority Commissioner-General Anthony Sarpong that more than GH¢11 billion had been lost at the ports through irregularities in country-of-origin declarations, goods classification, and valuation .

Dr Boakye called for a “carrot and stick” approach to revenue collection: rewarding agencies and personnel for strong performance while punishing misconduct swiftly. He also emphasised stronger institutional controls and technology-driven monitoring, citing the Publican AI system’s role in uncovering collusion within the import clearance chain .

Tax Exemptions Under Scrutiny

The IFS further urged a comprehensive review of Ghana’s incentive regimes, including those under the Free Zones Act and the automotive industry, noting that the Ghana Investment Promotion Centre’s incentives inventory identifies 31 separate packages covering income tax, customs, and financial incentives . The concern is that these exemptions may be eroding revenue without delivering the promised investment and job creation.

Political Context and Economic Backdrop

The IFS’s proposals land amid a fragile fiscal recovery. Ghana completed the final review of its US$3 billion IMF Extended Credit Facility in July 2026, with inflation falling from 23.8 per cent in December 2024 to 5.4 per cent in December 2025 and GDP growth reaching 6 per cent . Yet the government Statistician has acknowledged that the expansion has not translated into decent jobs, with 92 per cent of businesses remaining informal .

The 2027 budget will introduce the government’s US$10 billion New Economy Programme, a four-year investment initiative running from 2027 to 2030 aimed at strengthening domestic production, value addition, and job creation . Whether that programme can be financed without exacerbating debt pressures will depend heavily on the revenue reforms the IFS is advocating.

Ghana’s public debt remains a persistent constraint, and the government has set a target to cap the debt-to-GDP ratio at 45 per cent by 2034 . Without a significant boost in domestic revenue mobilisation, analysts warn, the fiscal space for the New Economy agenda will remain narrow—and the country’s dependence on borrowing will persist.

As Dr Boakye concluded, addressing these structural weaknesses is “critical to strengthening domestic revenue mobilisation, reducing dependence on borrowing and creating the fiscal space required to support Ghana’s development priorities.”