Study on Deficit Financing in Ghana and Its Impact on the Economy

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. Deficit financing occurs when a country’s expenditure exceeds its revenue over a specific period, usually a year, in Ghana. 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.