World Bank warns Ghana against return to fiscal indiscipline
By Solomon Nartey Tetteh
The Lead Economist for Ghana, Liberia and Sierra Leone at the World Bank, Stefano Curto, has cautioned that Ghana risks returning to a cycle of fiscal indiscipline and resource dependence if ongoing reforms are not sustained.
He made the remarks during the launch of the 2025 Policy Note in Accra.
According to Mr Curto, while Ghana’s economic outlook shows signs of improvement after years of turbulence, the progress remains fragile.
He stressed that the recurring pattern of economic instability highlights the urgent need for consistency in implementing fiscal and structural reforms.
“The message of the report is that although the situation over the last couple of years and in the next few years will improve, this is nothing new. It is part of a cycle that repeats itself. The question is how to break this cycle. It really depends on building on reforms and working consistently. Otherwise, the country will re-enter a cycle of fiscal indiscipline and reliance on natural resources,” Mr Curto said.
He identified two major challenges on the fiscal front: Ghana’s persistent structural deficit, caused by low revenue generation, and procyclical spending, where governments increase expenditure and borrow heavily during times of easy access to capital markets.
Mr Curto also expressed concern over debt accumulation in the energy sector, warning that unless inefficiencies are addressed, sustainable power supply will remain elusive.
He pointed out that emergency power contracts signed in 2015 to curb nationwide outages had become costly over time and needed urgent review.
“On the energy side, there are several aspects to consider. One is the cost of generation. When the contracts were signed in 2015, it was done as an emergency measure. Now the situation has stabilised, so it’s important to make the contracts more sustainable,” Mr Curto explained.
He further noted that energy sector sustainability hinges on reducing both technical and commercial losses.
Currently, only two-thirds of electricity produced is paid for, a situation he said undermines the sector’s financial viability.
