University of Ghana development economist Hayford Mensah Ayerakwa has delivered a withering assessment of the government’s 2026 fiscal framework, arguing that ambitious revenue targets rest on optimistic compliance assumptions rather than structural reforms capable of generating sustainable income streams.
Speaking on Asaase Radio’s breakfast program Monday, Ayerakwa challenged Finance Minister Cassiel Ato Forson’s projection that Ghana can mobilize GH¢268.1 billion in 2026 revenue while simultaneously cutting taxes worth GH¢5.7 billion. The economist characterized this approach as fundamentally contradictory, questioning how authorities expect to replace lost income from abolished levies without introducing novel revenue generation mechanisms.
“Sustainability will depend on the novelty the minister introduces. Unfortunately, I’m not seeing that novelty,” Ayerakwa stated during the broadcast. “We are cutting essential tax handles like the COVID-19 levy, yet I don’t see innovative ways of replacing that revenue.”
The critique arrives as Ghana transitions from International Monetary Fund (IMF) supported stabilization toward what authorities describe as growth-oriented fiscal policy. Finance Minister Forson presented the GH¢302.5 billion budget November 13 under the theme “Resetting for Growth, Jobs and Economic Transformation,” projecting 18.3 percent revenue growth over 2025 collections through enhanced compliance and digital tax administration rather than new levies.
Ayerakwa identified property rates, road tolls, and modernized revenue systems as underutilized opportunities that governments have ignored for decades despite their potential to generate substantial income. His criticism echoes longstanding frustrations among fiscal policy experts who watch successive administrations promise to broaden tax bases while actually depending on narrow collections from compliant formal sector taxpayers and import duties.
The 2026 budget projects non-oil tax revenue contributing GH¢216.1 billion, representing the backbone of domestic mobilization efforts, yet this ambitious target assumes compliance improvements that Ghana has struggled to achieve historically. Recent audits exposed fraudulent use of Import Declaration Forms (IDFs) for illicit forex transfers and widespread under-declaration of import values that deprived Ghana of approximately GH¢11 billion in potential revenue, illustrating systematic evasion that undermines collections.
The economist’s concerns about port revenue leakage extend beyond monetary losses to fundamental questions about institutional integrity. Ayerakwa argued Monday that Ghana’s current system of dollar denominated import duties creates unpredictability for businesses while facilitating corruption through under-declaration and false valuation. He advocated for fixed cedi based customs valuations that would enhance transparency and eliminate exchange rate gaming.
“You are not even sure how much duty you will pay at the time of importing a container. That is wrong,” Ayerakwa emphasized during the interview. He contended that when businesses cannot calculate import costs reliably, they face operational uncertainty that discourages investment and formal compliance while creating opportunities for corrupt officials to extract bribes in exchange for favorable duty assessments.
The government plans deploying artificial intelligence driven pre-arrival inspection systems to detect under-invoicing and misclassification of goods, though Ayerakwa suggested technological solutions alone cannot overcome institutional weaknesses when enforcement agencies maintain adversarial rather than supportive relationships with taxpayers. His broader argument holds that Ghana’s revenue mobilization failures stem less from technical capacity gaps than from systemic factors including corruption, poor taxpayer service, and politicized administration.
The economist challenged official narratives attributing Ghana’s recent inflation decline to prudent fiscal management, instead crediting favorable weather patterns, good harvests, reduced transport fares, and exchange rate stability. This alternative explanation matters because if inflation improvements derive from temporary external conditions rather than structural reforms, gains could reverse quickly when circumstances change.
“Our food inflation has gone down because the rains have been favourable. We have not introduced major irrigation infrastructure to guarantee all-year-round production,” Ayerakwa cautioned. Ghana’s inflation dropped from 23.8 percent in 2024 to 8.0 percent by October 2025, representing remarkable progress that officials cite as evidence of effective policy coordination between fiscal and monetary authorities.
Yet Ayerakwa warned that sustainability depends on factors largely outside government control, including global commodity prices, exchange rate movements, and agricultural productivity influenced by rainfall variability rather than deliberate irrigation investments. Ghana remains heavily dependent on rain-fed agriculture despite decades of policy statements promising irrigation expansion, leaving food security vulnerable to climate shocks that increasingly disrupt traditional growing seasons.
The economist raised particularly sharp questions about Ghana’s gold revenue stream, pointing to the government’s reported $13.3 billion in gold sales through September 2025 while questioning the sources of these minerals. “These gold buyers often buy from illegal miners. There is a direct relationship between the rise in illegal mining and the revenue we are making,” Ayerakwa stated, linking increased gold exports directly to galamsey activities devastating Ghana’s water bodies, forests, and agricultural lands.
His observation exposes uncomfortable tensions between revenue generation imperatives and environmental protection commitments. Ghana’s gold exports have surged as authorities struggle to meet fiscal targets, yet much of this production comes from illegal small-scale operations that employ mercury contamination, destroy river systems, and operate outside regulatory frameworks. When government gold purchasing programs buy from these sources without rigorous verification, they essentially monetize environmental crimes while claiming revenue success.
Ayerakwa questioned whether financial gains justify environmental destruction and loss of lives associated with illegal mining. His challenge carries moral weight because galamsey operations have poisoned major water bodies including rivers supplying treatment plants for urban populations, destroyed farmlands reducing agricultural productivity, and killed miners in frequent pit collapses. If gold revenue depends on activities generating these harms, Ghana’s fiscal strategy may prove economically profitable short-term while imposing devastating long-term costs on communities and ecosystems.
On electricity costs, Ayerakwa warned that businesses face existential threats from proposed tariff increases exceeding 200 percent that utility companies are seeking. He dismissed claims that Value Added Tax (VAT) rationalization would provide meaningful relief to enterprises, noting the reforms primarily benefit consumers rather than commercial operators who face rising energy costs as their most significant expense pressure.
“The VAT rationalisation puts money back in the pockets of consumers, not businesses,” the economist explained. “If electricity tariffs rise next month, the business community will either have to absorb it or pass it on.” The budget abolished the COVID-19 Health Recovery Levy, reduced effective VAT rates from 21.9 percent to 20 percent, and increased VAT registration thresholds from GH¢200,000 to GH¢750,000, changes that government projects will return GH¢3.7 billion to households and enterprises.
However, these tax cuts pale beside potential electricity cost increases that would fundamentally alter business operating economics. Manufacturing enterprises already struggling with high production costs relative to competitors in neighboring countries face collapse if energy expenses double or triple, regardless of modest VAT savings. The disconnect between celebratory rhetoric around tax cuts and harsh realities of utility cost pressures reveals gaps between policy announcements and business community experiences.
Ayerakwa criticized consultation processes leading to budget formulation, characterizing last-minute engagement with market actors as performative rather than genuine input gathering. “The quality of consultation has been optics rather than genuine input gathering,” he stated, suggesting that when authorities conduct rushed stakeholder meetings immediately before budget presentations, they seek political cover rather than substantive feedback that might reshape proposals.
Effective consultation requires sustained engagement throughout budget development cycles, giving stakeholders time to analyze proposals, develop alternatives, and negotiate compromises before final documents reach Parliament. When governments instead brief interest groups on already finalized plans, they deny meaningful participation while claiming inclusive processes. This pattern breeds cynicism among business communities who recognize that their concerns receive rhetorical acknowledgment without influencing actual policy decisions.
The economist warned Finance Minister Forson may struggle achieving targeted compliance levels unless taxpayer engagement improves dramatically. “If businesses feel treated like criminals when they go to comply, they will find alternative ways. We must support them, not frustrate them,” Ayerakwa emphasized, pointing to cultural factors that undermine voluntary compliance when enforcement agencies adopt adversarial rather than facilitative approaches.
Recent analysis examining VAT threshold increases cautioned that reforms could incentivize traders to avoid expansion and operate below thresholds rather than formalize and grow, illustrating how poorly designed policies generate unintended consequences that work against stated objectives. When the Ghana Revenue Authority (GRA) establishes registration requirements at GH¢750,000 turnover, businesses earning GH¢700,000 have strong incentives to suppress reported revenue or split operations to remain below thresholds and avoid compliance burdens.
These gaming strategies reduce total collections while distorting business decisions away from economically optimal scales toward tax-minimizing structures. Ayerakwa’s broader argument holds that sustainable revenue mobilization requires transforming relationships between tax authorities and citizens from mutual suspicion toward cooperative partnerships where compliance feels fair rather than exploitative.
In previous interviews, Ayerakwa proposed novel approaches to reinstituting road tolls by integrating them into annual vehicle roadworthiness certification at the Driver and Vehicle Licensing Authority (DVLA), demonstrating the innovative thinking he finds lacking in official budget proposals. Such integration would capture revenue from all registered vehicles automatically during mandatory certification processes, eliminating collection infrastructure costs while ensuring comprehensive coverage.
Property rate collection represents another underutilized revenue source that successive governments have ignored despite enormous potential. Ghana’s property taxation remains rudimentary compared to international standards, with outdated valuation rolls, weak enforcement, and political resistance to comprehensive reforms. Yet property taxes offer advantages including visibility, stability, and progressive incidence that make them superior to many alternatives, particularly in rapidly urbanizing contexts where real estate values appreciate substantially.
The fundamental tension Ayerakwa identified involves Ghana’s perpetual dilemma of promising reduced tax burdens while needing increased revenues to fund development aspirations. The 2026 budget commits to Big Push Infrastructure Programme requiring $10 billion in multi-year investments alongside expanded social spending, yet proposes financing these commitments through compliance improvements rather than broadened tax bases or new levies.
This approach assumes Ghana can squeeze significantly more revenue from existing taxpayers and sources through better administration and enforcement, without addressing structural issues that constrain collections. Historical evidence suggests such optimism proves misplaced repeatedly, as revenue projections consistently exceed actual performance when they depend on compliance assumptions rather than policy changes creating new income streams.
Analysis examining budget strengths and weaknesses concluded that ambitious fiscal targets hinge on optimistic revenue assumptions that may prove difficult to achieve given Ghana’s historical tax compliance challenges and limited diversification of revenue bases. This assessment aligns with Ayerakwa’s critique that sustainability depends on innovation the current framework lacks.
The economist has also questioned Bank of Ghana’s heavy forex market interventions, warning that artificial cedi stability harms domestic producers by making exports less competitive while cheapening imports, illustrating his willingness to challenge official narratives even when they celebrate apparent policy successes. His skepticism toward government claims reflects broader academic perspectives emphasizing that macroeconomic indicators can improve temporarily through unsustainable interventions that merely postpone rather than resolve underlying problems.
The debate ultimately centers on whether Ghana can achieve sustained development through incremental adjustments to existing systems or requires fundamental restructuring of revenue mobilization, expenditure priorities, and institutional arrangements. Ayerakwa’s critique suggests current approaches lack transformative potential necessary to break patterns where successive governments announce ambitious plans that founder on implementation failures rooted in systemic constraints.
The budget aligns with amended Public Financial Management Act and IMF-supported program commitments, targeting primary surplus of 1.5 percent of GDP and overall deficit of 2.2 percent, demonstrating fiscal discipline that has restored international credibility. Fitch upgraded Ghana to B- with stable outlook while inflation declined to 8 percent and Treasury bill rates fell substantially, reflecting genuine progress on macroeconomic stabilization fronts.
Yet stabilization represents necessary but insufficient conditions for transformation. Ghana has achieved similar macroeconomic improvements in previous periods only to watch gains dissipate when governments relaxed discipline, external conditions deteriorated, or political pressures overwhelmed technical policy frameworks. Whether current stability proves durable depends substantially on whether authorities can generate revenues sufficient to fund commitments without resorting to unsustainable borrowing or money printing.
Ayerakwa’s repeated emphasis on “novelty” and “innovation” reflects frustration that Ghana’s fiscal policy discussions recycle familiar themes, promises, and mechanisms that have failed repeatedly to deliver transformative outcomes. His call for exploring underutilized revenue sources, reforming dysfunctional systems, and rebuilding trust between state and citizens suggests that technical fiscal competence alone cannot overcome political economy constraints and institutional weaknesses that ultimately determine policy effectiveness.
The coming months will reveal whether budget projections prove realistic or optimistic as implementation proceeds and revenue collections either meet or fall short of targets. If Ayerakwa’s skepticism proves justified and the government struggles to replace abolished levy revenues through improved compliance alone, fiscal pressures may force mid-year adjustments that undermine credibility and revive macroeconomic instability. Conversely, if authorities succeed in broadening compliance and tapping underutilized sources, Ghana may establish sustainable foundations for development financing that reduce dependence on external borrowing and volatile commodity revenues.
Source: newsghana.com.gh
