The Institute for Fiscal Studies (IFS) is urging significant changes in how the country’s resource extraction industry is managed, highlighting the importance of production-sharing contracts due to ongoing declines in government income.
In fact, IFS believes that government’s latest fiscal strategy is unlikely to deliver the funds needed to finance its development agenda.
In an assessment of the 2025 mid-year budget review, the think-tank said the country should abandon its concession regime that allows foreign firms to dominate mineral and oil production at the expense of state revenue.
Leslie Dwight Mensah, a researcher affiliated with IFS, strongly believes that a reboot is essential and must start within the extractive industry.
IFS argues that Ghana’s reliance on concessions has limited fiscal returns from its gold and oil resources, leaving the state dependent on borrowing and tax hikes which strain businesses and households alike.
In comparison, profit-sharing contracts—employed in nations like Botswana and various Gulf countries—enable governments to obtain a greater share of revenue from natural resources.
Indeed, Ghana’s development prospects hinge on capturing greater value from its mineral and petroleum wealth rather than continuing to rely on taxes and external debt.
The criticism from the IMF follows continued disappointment in Ghana’s income generation. State revenues and aid were below plan by GH¢3.24 billion (US$210 million) during the first half of 2025, with earnings from petroleum falling significantly, exceeding a 40% shortfall.
The lack of funds led to significant reductions in investment spending, disrupting the administration’s ‘Big Push’ plan for infrastructure development. Even with these shortfalls, the government kept its initial annual forecasts in the updated 2025 budget—except for a change related to increased energy taxes.
IFS stated that the unaltered goals are impractical, considering the poor performance during the first half of the year.
Finally, the policy institute warned against rushing back into global financial markets to fill funding gaps, stating that new loans could swiftly reverse gains made through recent debt renegotiations. Public revenue in Ghana is already heavily allocated towards servicing debt obligations.
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