Ghana Public Finance Review - Building the Foundations for a Resilient and Equitable Fiscal Policy - Enhancing Domestic Revenue Mobilization for Fiscal Sustainability

Jul 19, 2026

Upload by Finn

Enhancing Domestic Revenue Mobilization for Fiscal Sustainability examines Ghana’s weakening domestic revenue performance and its implications for budget credibility and macro-fiscal stability. Collected revenues fell from 15.7% of GDP in 2017 to 13% in 2021, with revenue targets missed by over 7% on average. The analysis details declines across key taxes, including income taxes and VAT, highlights gaps versus structural peers and the SSA average, and evaluates reform measures such as the revised VAT rate and tightening tax exemptions to improve revenue outcomes.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages28

Reading Time1 h 11 min

AccessFree to download

Enhancing Domestic Revenue Mobilization for Fiscal Sustainability

Ghana’s recent revenue performance has been lackluster

Ghana’s tax collection relative to GDP is below structural peers

VAT performance decline and reform options

Enhancing Domestic Revenue Mobilization for Fiscal Sustainability Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized G Review Foundations forhana Pub lic Finance Building the a Resilient and Equitable Fiscal Policy 2/ 2/ Enhancing Domestic Revenue Mobilization for Fiscal Sustainability 47 2.1/ Ghana’s recent revenue performance has been lackluster Ghana’s domestic revenue mobilization (DRM) has suffered in recent years, with collected revenues as a share of gross domestic product (GDP) declining from 15.7 percent in 2017 to 13 percent in 2021. Revenue targets were missed by more than 7 percent on average during that period, affecting budget credibility. The impact of Russia’s invasion of Ukraine, notably through higher inflation, has exposed underlying macro-fiscal instability and calls for bold tax policy measures and tax administration reforms. In 2023, Ghana’s economic growth was more resilient than expected, also thanks to greater government appetite for reform and deeper engagement with the International Monetary Fund (IMF) and the World Bank. Inflation has moderated, the fiscal and external positions have improved, and the exchange rate has stabilized. The adoption of an ambitious Medium Term Revenue Strategy (MTRS) for 2024–2027 lays a foundation for even more robust reforms toward fiscal stability and economic prosperity. Ghana Public Finance Review | Volume 2 / Detailed Analysis 48 Ghana’s revenue collection declined and fell short of targets in 2017–2021 Figure 2.1. Planned vs. actual revenue (% GDP) Tax on income and property Tax on Goods and Services Taxes international trade Non Tax Revenue Actual Total Tax Revenue Source: Ministry of Finance (MoF) fiscal data reports and World Bank calculations. Ghana’s tax collection relative to GDP remains below the levels of its structural peers. Between 2017 and 2021, Ghana’s average tax collection was 13.2 percent of GDP, which is 8 percentage points below the country’s estimated tax capacity of 21.2 percent of GDP as of 2018,16 and also below the Sub-Saharan Africa (SSA) average. Except for turnover and excise taxes,17 collections from all major taxes have declined in recent years. Value-added tax (VAT) collection decreased from a high of 4.0 percent of GDP in 2015 to 2.0 percent in 2021. Corporate income tax (CIT) and personal income tax (PIT) fell from 3.1 percent and 2.2 percent of GDP, respectively, in 2018, to 2.8 percent and 2.0 percent in 2021. Taxes on international trade dropped from a high of 2.1 percent of GDP in 2017 to 1.5 percent in 2021. The persistent decline in revenue from income taxes and VAT contrasts sharply with trends observed in peer countries. However, two reforms enacted in 2023—a raise in the standard VAT rate from 12.5 percent to 15 percent and the introduction of a new highincome PIT bracket taxed at 35 percent—are projected to increase revenues. Additionally, the tightening of the Exemptions Act and rationalization of tax expenditures (TEs) in the 2024 budget are expected to boost CIT revenues. 16 World Bank Revenue Dashboard. 17 More than 90 percent of excise revenues in Ghana derive from petroleum taxes, that is, energy and road fund levies. 2/ Enhancing Domestic Revenue Mobilization for Fiscal Sustainability 49 | Ghana’s tax take relative to GDP is lower than in structural peers and in SSA at large | | --- | | Figure 2.2. Tax revenue (% GDP) | % of GDP 20.0 15.0 10.0 5.0 0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Cambodia Cameroon Cote d'voire Ghana Senegal SSA | Source: United Nations University-World Institute for Development Economics Research (UNU-Wider) dataset and World Bank calculations. | | | | --- | --- | --- | | VAT revenues declined significantly between 2015 and 2021 | | | | Figure 2.3. Tax revenue by type (% GDP) | | | | % of GDP | 16.0
14.0
12.0
10.0
8.0
6.

FAQs

How has Ghana’s domestic revenue mobilization changed from 2017 to 2021?

Collected revenues declined from 15.7% of GDP in 2017 to 13% in 2021, and revenue targets were missed by more than 7% on average during that period.

Which tax areas showed the biggest weakness relative to GDP and peer countries?

Income taxes and VAT declined persistently, and Ghana’s tax take remained below both its estimated tax capacity and the SSA average, with VAT productivity and efficiency also falling.

What 2023 and 2024 measures are expected to improve Ghana’s revenues?

In 2023, the standard VAT rate was raised and a new high-income PIT bracket was introduced; in 2024, the Exemptions Act was tightened and tax expenditures were rationalized, aiming to boost CIT and overall collections.

Jul 19, 2026

Upload by Finn