Deficit Financing in Ghana and Its Impact on the Economy

Dickson Akoto^1,

¹Radford University College, Accra, Ghana. P.O.Box AF 4191, Adenta, Accra, Ghana

Cite this paper:
Dickson Akoto. Deficit Financing in Ghana and Its Impact on the Economy. Journal of Finance and Economics. 2020; 8(1):6-12. doi: 10.12691/jfe-8-1-2

Abstract

Deficit financing in Ghana has become an annual phenomenon mainly as a result of the country’s inability to raise enough revenue to finance its budget. This situation has prompted the researcher to assess its impact on the economy. Analysis from the research indicates that Ghana’s budget deficit financing and economic growth are negatively correlated. This implies that deficit financing has had negative impact on Ghana’s economic growth over the research period. The research also showed that budget deficit financing increased in political election years of the country; indicating that over ambitious agenda of politicians is one of the contributing factors of budget deficits in Ghana.

Keywords:
budget deficit surplus economic growth gross national product coefficient of correlation

This work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

References:

[1]	Lipsey, R.G. (1980), An introduction to Positive Economics, fifth edition, Butler and Tanner.
[2]	wikipedia.org/wiki/Deficit_spending (14/09/2017).
[3]	Muley, R. (2017), Deficit Financing: Meaning, Effects and Advantages, Economics Discussion.net
[4]	Yusuf, K. (2017), Accounting and Business Magazine, January 2017 edition, vol. 20 issue 1 pp. 32, ACCA publishers.
[5]	Economic Affairs Series, ECON 116 EN (PE 168.283), November 1999.
[6]	ACCA (2016), Performance Management, Kaplan Publishing.
[7]	Drury C (2008), Management and Cost Accounting, 7th edition, International Thomson Business Press.
[8]	Lucey T and Lucey T (2003), Management accounting, reprint edition, Cengage learning EMEA.
[9]	Lee, D.R (1986), Taxation and the Deficit Economy, fiscal policy and capital formation in the United States, Pacific Research Institute for Public Policy.
[10]	Hubbard, R.G. and O’brien, A.P. (2009), Macroeconomics, second edition, Prentice Hall Pearson.
[11]	Jadhav, A. and Neelankavil, J. (2011), Deficit financing- causes, consequences and potential cures. Journal of Applied Business and Economics vol.12 (6) 2011.
[12]	Miller, R.L (2004), Economics Today, twelfth edition, Pearson Addison Wesley.
[13]	Akoto D (2019) Assessing the effectiveness of the tax system in Ghana as a tool for economic development (unpublished).
[14]	Malhotra S (2019), what is the role of deficit financing in developing economy? iiste.org.
[15]	Abdallah, A.N. (2008), Taxation in Ghana, Principles, Practice and Planning, Second Edition, Black Mask Limited.
[16]	Eze, O.R. and Ogiji, F.O. (2016), Impact of deficit financing on economic stability in Nigeria; analysis of economic growth. Journal of Applied Finance & Banking, vol 6, no.1, 2016, pp 111-125.
[17]	Moheeth, M. (2018), Deficit financing: Meaning, effects and limitation. Google web light 27/1/2018.
[18]	Fitzegerald, C. and Florenz, F. (2016 May), An unlikely role model, Accounting and Business magazine, p16, May 2016 edition.
[19]	Boariu, A. and Bilan, I. (2007), Inflationary effects of budget deficit financing in contemporary economics. Onlinelibrary. willey.com 27/1/2018..
[20]	Ghana Statistical Services (2017), Ghana’s growth rates data, Accra.
[21]	Bank of Ghana (2017), Ghana’s budget deficits, Accra.