Ghana's push for faster economic growth could be hampered by weak domestic revenue mobilisation, the Institute of Statistical, Social and Economic Research (ISSER) has warned.
According to ISSER, Ghana's tax revenue remains below the sub-Saharan African average, limiting government's ability to fund development projects and increasing the risk of over-reliance on spending cuts to balance the budget.
The concern was raised during the launch of ISSER's State of the Ghanaian Economy Report 2025, at a time when Ghana's economy is showing signs of recovery and government is seeking to consolidate fiscal gains made in 2025.
Presenting the report, ISSER Director, Professor Robert Darko Osei, disclosed that Ghana's tax revenue stood at about 30% of GDP in 2025, which is significantly lower than what pertains in other sub-Saharan African countries.
"Our revenue effort is a bit low. In fact, tax revenue is under 30% in 2025, was about 30% of GDP, and that was significantly lower than that which pertains in sub-Saharan Africa," Prof. Osei noted.
He said the low revenue effort points to a mobilisation gap that must be addressed if Ghana wants to sustain stronger growth, stressing the need to expand the tax net rather than burdening the few already in the formal system.
"What it then points to is the need for bringing more into the tax net as it were, so that the revenue effort can be improved," he added.
Prof. Osei also cautioned that the planned rebasing of Ghana's economy could further reduce the tax-to-GDP ratio if revenue collection does not increase in line with the expanded economy.
He explained that Ghana's fiscal improvement in 2025 was not driven by significant revenue growth, as revenue and grants remained largely unchanged relative to GDP, while the adjustment came mainly from expenditure cuts.
This, he said, means government must rethink its spending priorities while taking steps to strengthen domestic revenue.
He also noted that Ghana's average tariff rates are relatively higher than those in the sub-region, which further reinforces the need to broaden the domestic tax base rather than relying heavily on existing sources.
ISSER concluded that Ghana's challenge is shifting from restoring macroeconomic stability to creating enough fiscal space to finance infrastructure, jobs and economic diversification, warning that without a broader and more productive tax base, headline growth alone will not guarantee the resources needed for development.