The Institute for Fiscal Studies (IFS) is advising the government to exercise caution when setting revenue targets in its upcoming maiden budget presentation.
The IFS highlighted a recurring issue seen in previous administrations, referred to as “optimism bias,” which can undermine public and investor confidence.
Senior Research Fellow at the IFS, Dr. Said Boakye raised this concern during a media briefing, where he identified six priority areas the government should focus on before the budget announcement.
“An essential feature of a credible budget is setting realistic revenue targets, as revenue is the cornerstone of any budget,” Dr. Boakye emphasized.
He noted that the government has struggled with setting achievable targets, explaining that over the years, actual revenue and grants have consistently fallen short of projections.
“Between 2013 and 2023, revenue targets were routinely overestimated, with an average deviation of -7.4%,” Dr. Boakye added.
Other critical points Dr. Boakye discussed included ensuring macroeconomic stability through strong fiscal consolidation, significantly reducing monetary growth, boosting economic growth to combat unemployment by prioritizing expenditure, and making strategic interventions in agriculture.
Meanwhile, Finance Minister Dr. Cassiel Ato Forson is set to present the Mahama administration’s first budget to Parliament on Tuesday, March 11, 2025.
This follows Parliament’s approval of a GHȼ68 billion mini-budget in January, intended to cover government expenditures for the first quarter of the year.
The Presidency has also proposed February 27, 2025, as the date for President John Mahama’s first State of the Nation Address under the new administration.
The upcoming budget is expected to outline key economic policies, spending priorities, and strategies to stabilize the economy.