Senior Research Fellow at the Institute of Economic Research and Public Policy (IERPP), Dr. Frank Bannor, has urged the government to provide a clear strategy for addressing the widening revenue gap created by recent tax cuts, particularly the scrapping of the COVID-19 levy.
Speaking during an analysis of the 2026 Budget Statement, Dr. Bannor warned that Ghana is entering a period of serious fiscal pressure, with revenue falling while debt servicing costs continue to rise sharply.
Citing Appendix 3A of the 2025 Budget, he noted that interest servicing is still the second-highest item on government spending. Of the GH¢57.7 billion set aside for interest payments, a staggering GH¢50 billion is allocated to domestic debt alone.
“That is shocking,” he said. “It reflects the volume of borrowing undertaken in the government’s first year, the debt it inherited, and the further borrowing projected going forward.”
He explained that while external debt servicing is estimated at GH¢7.6 billion, the figure appears low only because external debt payments are currently suspended under restructuring arrangements. These obligations are expected to resume from late 2026, with heavy repayment schedules stretching across 2027, 2028, 2029 and beyond.
Dr. Bannor stressed that the government’s decision to abolish some taxes—especially the COVID-19 levy, projected to contribute GH¢3.21 billion to the government’s GH¢229 billion revenue target for 2025—must be understood in the broader context of rising debt obligations.
“Removing it creates a significant hole in the revenue projections,” he explained. “What is relief to citizens becomes revenue loss to government.”
“Government cannot cut important sources of revenue without adjusting expenditure,” he warned. “The Finance Minister must explain how the shortfalls will be addressed, especially as he prepares to repeal the levy law.”
Source: metrotvonline.com
