By Ebenezer Adjei NJOKU A recent study from Deloitte highlights major risks to the 2026 Budget due to ongoing shortfalls in revenue, casting...
By Ebenezer Adjei NJOKU
A recent study from Deloitte highlights major risks to the 2026 Budget due to ongoing shortfalls in revenue, casting doubt on the long-term viability of the government's efforts to stabilize its finances.
Although key economic indicators demonstrated significant progress in 2025, the consulting company warned that inadequate tax collection, fluctuating oil revenues, and structural inefficiencies in the domestic revenue framework might jeopardize the government's ambitious revenue goals for the upcoming year.
The Ministry of Finance has established total revenue and grants for 2026 at GH¢268.1billion, which includes GH¢223.9billion from tax revenues—the highest figure in Ghana's fiscal history. Nevertheless, Deloitte's analysis of the 2025 financial results reveals a general trend of underperformance across most major tax categories, except for personal income tax and property taxes.
The report indicates that corporate income tax, PAYE, VAT, import duties, the growth and sustainability levy, and petroleum revenues were all below target in the first three quarters of 2025.
The highest notable difference was in oil revenues, which fell more than 50 percent below projections because of lower international crude prices, decreased domestic production, and a significant rise in the cedi's value, reducing the cedi value of oil exports.
Deloitte noted that oil-generated income, which previously served as a vital cushion in the budget, has grown more unstable: increasing the necessity for the government to speed up production reforms and explore hedging approaches.
The lack of effective domestic revenue collection highlights underlying structural issues, according to Deloitte, such as ongoing compliance problems, delays in VAT credit refunds, exemptions that reduce the tax base, and limited enforcement capabilities.
Taxes associated with imports faced lower import quantities and a stronger domestic currency, leading to a decrease in the taxable value of goods at the ports.
Moreover, changes in consumer behavior after inflation eased seem to have led to lower-than-anticipated VAT revenues during the second half of the year.
These developments spark doubts regarding the reliability of the 2026 revenue goal, especially considering that the budget relies significantly on enhanced tax collection to support new social initiatives, higher capital spending, and the government's key economic reform programs.
Deloitte cautioned that the financial structure might face challenges if the fundamental revenue decline continues – possibly leading to reductions in spending, increased loans, or the implementation of new policies during the year to maintain the financial trajectory.
The government's suggested VAT changes—highlighted by a drop in the actual VAT rate from 21.9 percent to 20 percent, removal of the COVID-19 surcharge, and an increased registration limit—mark a significant change in tax strategy.
Although these actions are anticipated to simplify compliance and boost business operations, Deloitte warns that effective execution will largely rely on enforcement and administrative capabilities.
The implementation of financial electronic tools, the growth of the e-VAT system, and a suggested VAT incentive program for buyers were all seen as favorable moves, but the company emphasized that successful execution will be crucial.
The consulting company also highlighted that the 2026 revenue plan is heavily dependent on increased non-tax income and better results from state-owned enterprises.
Nevertheless, various state-owned enterprises still exhibit financial vulnerability – characterized by operational inefficiencies and excessive debt burdens that may hinder their ability to support government revenue.
Deloitte suggested that the government should increase tax inspections, accelerate reforms in digital tax administration, impose stricter approval processes for exemptions, and expand compliance efforts focusing on industries with traditionally high levels of tax avoidance.
It also emphasized the importance of a more transparent system for managing oil revenues, including the potential for hedging to reduce the impact of sudden price changes.
Although there are worries, Deloitte recognized advancements in reducing the budget deficit and attaining a primary surplus for the first time in several years. The company pointed out that enhancements in inflation, exchange rate performance, and reserves have established positive circumstances for fiscal stability.
Nevertheless, it highlighted that maintaining the recovery in 2026 will necessitate "intentional, focused, and steady" efforts to raise revenue in order to prevent setbacks that might jeopardize the progress made during the previous year.
Provided by SyndiGate Media Inc. (Syndigate.info).
