Ghana government fiscal deficits: How small or how large?

Measuring fiscal performance is not easy. Official budget measures are often flawed with measurement problems, so much so that they may provide a distorted picture of fiscal policy performance. This paper estimates several measures of Ghana Government fiscal balances. The results show that (i) the treatment of grants and divestiture (capital) receipts as regular revenues obscures the reality that primary expenditures needed for basic government functions have become unsustainable by conventional tax revenue since 1992; (ii) conventional budget balance understated the broad deficit on average by about 3% of GDP between 1983 and 1995 and by as much as 4% of GDP by another deficit measure; (iii) depreciation-induced interest cost on the external debt averaged 0.5% of GDP annually; (iv) deficit financing by inflation tax on the stock of domestic debt averaged 3.8% of GDP; and (v) the consolidated public sector deficit exceeded the central government operational deficit on average by 1.2% of GDP for the period 1983-95.