The Institute for Fiscal Studies (IFS) has called for a reset in Ghana’s revenue mobilisation strategy, particularly within the extractive sector.
The Institute is alarmed with the inadequate revenue generation, undermining the government’s development programmes.
A senior research fellow at IFS, in a recent document, recommended that Ghana move away from the current concession regime and instead adopt Production Sharing Agreements (PSAs), arguing that, PSA have proven to generate higher revenues and foreign exchange inflows for resource-rich countries.
“Production sharing agreements have been shown to result in more substantial revenue generation and greater foreign exchange inflows, which can strengthen the economy on a more sustainable basis,” Leslie Dwight Mensah said.
As other energy experts have argued, Mr Mensah agreed that active state participation in the extractive industry would allow Ghana to exercise greater control over its natural resources, reducing reliance on third-party institutions to manage and market the country’s mineral produce. But he criticised the government’s Gold for Development programme, emphasizing that it fails to address Ghana’s fiscal revenue challenges.
According to him, the programme treats gold purely as a business commodity without ensuring majority state ownership or revenue capture for the country.
Key Recommendations
Among other things, the IFS research fellow outlined three major steps the government should take: Transition from concession regimes to PSAs in the extractive sector to increase state revenues and foreign exchange inflows; Refrain from rushing back to international borrowing as a short-term fix to fiscal challenges, as this risks deepening debt vulnerabilities and triggering another crisis; and Fully disclose and account for fiscal support provided to the financial sector in national accounts to present a complete picture of Ghana’s fiscal position.
Mr. Mensah stressed that implementing these measures would not only strengthen Ghana’s revenue base but also place the economy on a more sustainable growth path.
By Adnan Adams Mohammed
