Ghana Public Finance Review - Volume 2 - Macroeconomic and Fiscal Context - Foundations for a Resilient and Equitable Fiscal Policy

Jul 19, 2026

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Ghana’s macroeconomic and fiscal environment combines earlier poverty gains with recent setbacks driven by inflation, COVID-19 impacts, and the war in Ukraine. While poverty reduction outpaced the SSA average until 2020, poverty rose sharply afterward. Structural issues—including limited job creation, high informality, and large labor force growth—require fiscal policy to support economic transformation. Policy priorities include macro stability via deficit and borrowing limits, targeted investments and reforms for global value chain participation, strengthened ICT and digital skills, and improvements in human capital through adequate and more efficient spending.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages33

Reading Time1 h 23 min

AccessFree to download

Macroeconomic and Fiscal Context

Poverty trends and recent reversals

Jobs challenge and conditions for transformation

Fiscal policy priorities for stability and investment

Human development outcomes and spending efficiency

Macroeconomic and Fiscal Context 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 1/ 1/ Macroeconomic and Fiscal Context 15 1.1/ Despite past successes, Ghana faces multiple challenges into the future Ghana is one of the largest countries in Africa by gross domestic product (GDP) and population. With close to 32 million inhabitants and a GDP of US$73 billion, Ghana ranks 10th by population and 6th by economic size in Sub-Saharan Africa (SSA) and 47th and 78th, respectively, in the world. GDP per capita stands at about US$2,300, having almost quadrupled since the early 2000s, and reaches US$5,700 in constant purchasing power parity (PPP) terms (the 11th highest level in SSA) . Ghana’s economy has grown faster than the regional average since 2008, but macroeconomic imbalances, structural challenges, and external shocks have recently hindered growth. Since the 1990s, and up to 2019, the share of the population living in poverty has halved. While poverty affected more than 85 percent of Ghanaians in 1991, about half of the population lived on less than US$3.65 a day (2017 PPP) in 2016—a share lower than the SSA average, which stood at around 65 percent ( Figure 1.1) . This decline highlights that Ghana had outpaced the region on poverty reduction. However, the impacts of the COVID-19 pandemic and Russia’s invasion of Ukraine have caused poverty to bounce back since 2020, to reach 57 percent of the population in 2023, moving Ghana closer to the SSA average.1 Inflation has been one of the highest in the region and, by eroding the purchasing power of Ghanaians and affecting the most vulnerable groups of population, it has contributed to a recent increase in poverty. Ghana Public Finance Review | Volume 2 / Detailed Analysis 16 Ghana has achieved faster poverty reduction than SSA’s average, despite recent setbacks | Figure 1.1. Ghana and SSA poverty rate (US$3.65, 2017 PPP) | | --- | | | | Figure 1.2. SSA: poverty headcount rate for 2023 (lower-middle-income poverty line, US$3.65, 2017 PPP) | |

| | Source: World Bank 2023. Poverty and Inequality Platform for global poverty lineup numbers. Macro Poverty Outlook (Annual meetings 2023) . | For sustained poverty reduction, fiscal policy will need to support economic transformation. Ghana faces significant development challenges in providing more and better jobs and needs to further promote inclusive growth, partly through appropriate fiscal policies. As the share of extractives in GDP started to increase since the early 2010s, a sizable portion of Ghana’s growth has not 1/ Macroeconomic and Fiscal Context 17 generated sufficient jobs, and the impact of growth on poverty reduction has declined. Ghana now faces an acute jobs challenge that will require generating more and better job opportunities for lower-and mid-skilled workers. More than 70 percent of current jobs are in the informal sector, and around 10 million Ghanaians will enter the labor force between now and 2040. As set out in the 2021 World Bank Report ‘Ghana Rising’, Ghana needs to support improved productivity of existing firms and spur entrepreneurship, innovation, and job creation, through global integration (by harnessing the potential of trade, foreign direct investment, and global value chains) and technological progress (better management practices, increased use of technologies, and enhanced worker skills) . A strategic fiscal policy that promotes macroeconomic stability, generates the necessary public investments, and creates the right incentives is needed to tackle these challenges. To support economic transformation, fiscal policy must first ensure a stable macroeconomic environment conducive to private investments. This involves limiting deficits and government borrowing, which h

FAQs

Why has poverty increased in Ghana since 2020?

Poverty rebounded after 2020 due to the COVID-19 pandemic and the effects of Russia’s invasion of Ukraine, alongside inflation that eroded purchasing power and harmed vulnerable groups.

What jobs-related challenges does Ghana face?

Ghana has an acute jobs challenge: most jobs are informal, growth has not translated into sufficient employment, and around 10 million people are expected to enter the labor force by 2040, requiring more and better opportunities for lower- and mid-skilled workers.

What fiscal policy actions are proposed to support economic transformation?

Fiscal policy should first ensure macroeconomic stability by limiting deficits and borrowing, then support targeted public investment and reforms to reduce barriers to global value chains, strengthen trade facilitation, improve mobility and urban planning, and expand ICT and digital capabilities.

Jul 19, 2026

Upload by Finn