Developing countries, including Ghana, are facing mounting fiscal strain as revenues from natural resources decline and foreign aid from advanced economies continues to shrink, the International Monetary Fund has revealed.

In its latest update of the World Revenue Longitudinal Database, the IMF paints a sobering picture of weakening public finances across low-income and emerging market economies. According to the Fund, income from extractive industries—such as oil, gas and mining—together with foreign aid grants for general government spending, has dropped by a combined 3.8 percentage points of Gross Domestic Product (GDP) since 2000.

This sharp decline, the report notes, has not been fully offset by improvements in tax collection. While tax revenues have increased over the same period, the gains—amounting to 2.6 percentage points of GDP—have only managed to cover about two-thirds of the losses, leaving a persistent financing gap.

The IMF identifies falling proceeds from natural resource extraction as the single largest contributor to the revenue slump. These proceeds, often referred to as non-tax revenues, include royalties, profit-sharing arrangements and dividends from state-owned enterprises operating in sectors such as mining and petroleum—industries that remain central to the economies of countries like Ghana.

Foreign aid, particularly grants that governments rely on for general budgetary support, has also declined significantly, compounding the fiscal pressures. The dual shock—shrinking extractive revenues and reduced donor inflows—has left many developing economies struggling to maintain public spending and meet development targets.

The implications are far-reaching. With limited fiscal space, governments face difficult trade-offs between financing infrastructure, social services and debt obligations. For resource-dependent economies, volatility in global commodity prices further exacerbates uncertainty in revenue flows.

To bridge the gap, the IMF emphasises the urgent need for stronger domestic revenue mobilisation, particularly through more efficient and broad-based tax systems. Without this shift, the Fund warns, affected countries may find it increasingly difficult to achieve sustainable economic development.

“Closing the gap often requires collecting more tax revenue,” the IMF notes, stressing that long-term fiscal stability depends on a country’s ability to generate reliable income internally rather than relying on unpredictable external sources.

However, boosting tax revenue is not merely a matter of raising rates. The IMF underscores the importance of sustained investment in tax policy reforms and administrative capacity. This includes modernising tax systems, improving compliance, reducing leakages, and strengthening institutions responsible for revenue collection.

The Fund indicates that it is supporting member countries through targeted capacity development programmes. These interventions—delivered in collaboration with donor nations and international partners—focus on technical assistance and training aimed at enhancing tax administration and policy design.

Such efforts are intended to reduce dependence on volatile revenue streams like extractive industries and foreign aid, while building more resilient fiscal systems. According to the IMF, stronger domestic revenue frameworks not only improve national economic stability but also contribute to broader global growth.

Underlying these policy recommendations is the need for accurate and comprehensive data. The IMF’s World Revenue Longitudinal Database, which tracks revenue trends across 195 economies over several decades, provides policymakers with detailed insights into how governments generate income. The database is widely used by researchers and development practitioners to benchmark performance and identify priority areas for reform.

For countries like Ghana, where natural resource revenues and external support have historically played a significant role in public financing, the IMF’s findings reinforce a critical policy challenge: how to transition towards a more self-reliant and устойчивый revenue model in an increasingly uncertain global environment.

While the path forward may require difficult reforms, the IMF maintains that strengthening domestic revenue systems remains the most viable route to fiscal resilience and long-term economic sustainability.

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A detailed review of the Bank of Ghana’s (BoG) 2025 audited financial statements suggests that recent policy decisions taken by the central bank significantly worsened its financial position, partly contributing to an estimated underlying loss of about GH¢44 billion, according to an analysis presented by the Minority Caucus in Parliament.

Addressing a news conference in Accra on Sunday, May 3, 2026, the Minority said although the BoG officially reported a headline loss of GH¢15.6 billion for the 2025 financial year, the Minority argues that this figure understates the true economic cost of policy choices made during the period.When additional losses recorded in Other Comprehensive Income (OCI) and one-off gains from the sale of gold reserves are taken into account, the total loss rises sharply.

The BoG’s published accounts show a net operating loss of GH¢15.63 billion for 2025. However, the same statements also disclose an additional GH¢19.3 billion loss recorded under Other Comprehensive Income (OCI), mainly from foreign exchange, gold and securities revaluation effects.

Adding these two components produces a total comprehensive loss of roughly GH¢35 billion.
The Minority’s analysis goes further by adjusting for a reported GH¢9.6 billion gain from the sale of gold assets during the year. That gain, they argue, was a one-off transaction rather than recurring operational income.
“When it is excluded to assess the Bank’s underlying performance, the effective economic loss rises to approximately GH¢44 billion.

“This is not a dispute about arithmetic”, the Ranking Member on the Economy and Development Committee, Kojo Oppong Nkrumah who read the statement said.
He added “It is about whether one-off asset sales and accounting treatments should be used to downplay the true cost of decisions taken in 2025.”

Central to the Minority’s argument is the claim that a series of policy reversals sharply increased the Bank’s operating costs, particularly the cost of liquidity management. In 2025, the BoG spent GH¢16.7 billion on Open Market Operations (OMO) to sterilise excess liquidity, more than double the amount paid in cash interest the previous year.

According to the Minority, earlier low-cost tools for managing liquidity, including a dynamic Cash Reserve Ratio framework and cedi equivalent reserve requirements for foreign-currency deposits were prematurely abandoned.

In their place, the Bank relied heavily on interest-bearing bills, significantly increasing the interest burden on the central bank.
Audit notes show that outstanding sterilisation bills rose from about GH¢32.7 billion at the end of 2024 to GH¢93.6 billion by the end of 2025, while interest paid on these instruments jumped to about GH¢14.6 billion within a single year.

“These were not unavoidable costs of stabilisation alone,” the Oppong. Nkrumah argued, stressing further that “they were amplified by deliberate policy reversals that replaced low-cost instruments with the most expensive ones available.”

The sale of up to half of the Bank’s gold reserves also features prominently in the analysis. While the BoG recorded net gains from the transaction in 2025, the Minority contends that the sale was driven by the need to cushion losses rather than by long-term reserve management considerations.

They further argue that changes to the gold purchasing structure, including routing purchases through GoldBod, resulted in losses being borne by the BoG while profits accrued elsewhere in the public sector.

The accounting framework used in preparing the 2025 accounts has also drawn attention. The external auditor, KPMG, noted that the statements were prepared using the Bank’s own accounting policies rather than full International Financial Reporting Standards (IFRS).
Under the Bank of Ghana Act, certain valuation gains and losses are excluded from the determination of annual profit or loss and instead recorded in equity.

While this treatment is permitted by law, the Minority maintains that it obscures the scale of the Bank’s underlying economic losses and delays corrective action.
Beyond the total loss figure, the analysis raises concerns about what it describes as “policy insolvency”.The BoG reported a policy solvency surplus of GH¢5.5 billion for 2025, but the Minority disputes this on the grounds that the calculation includes the one-off gold-sale gain.

Excluding that gain, they argue, shows that operational income was insufficient to cover the cost of monetary policy operations, implying a policy deficit of around GH¢4 billion for the year.
The Minority acknowledged that disinflation, exchange rate adjustments, and legacy effects from earlier economic interventions also played a role.

However, it insists that decisions taken in 2025 materially amplified those losses.In their words, “Policy decisions did not create every shock facing the Bank, but they significantly worsened the financial outcome.”
The BoG and the Majority Caucus have defended the 2025 results as the necessary cost of stabilising the economy after years of macroeconomic stress.

However, the Minority says such argument is defenceless.

By Stephen Larbi

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