It said effective fiscal policy rests on credible budgets and if a budget lacked credibility, its policy intentions were less likely to be achieved.

The IFS in a paper titled: ‘What should be the priorities of the new government as it confronts the ongoing economic difficulties and as it prepares the 2025 budget and economic policy statement,’ said “Where this is a chronic challenge, it is likely to reduce confidence in fiscal policy, undercutting its effectiveness. An essential feature of a credible budget is realistic revenue targets, since revenue is the cornerstone of any budge.”

Again, it noted that the government over the years had featured routine over projection of revenues.

For instance, IFS said actu­al total revenue and grants was below the budget target every year from 2013 to 2023, with an average deviation of negative 7.4 per cent.

To this end, the IFS stated that the Ministry of Finance should improve the realism of revenue targets to underpin budget cred­ibility.

“The Ministry of Finance must review the Ministry’s mac­ro-fiscal forecasting framework and processes with a view to addressing possible optimism bias in the projection of revenue,” the IFS said.

It said the government must improve estimation of the reve­nue impact of new tax policies by strengthening the underlying data.

Furthermore, the IFS indicat­ed the government should involve independent experts to evaluate and advise the Ministry about its forecasts.

“The government should adopt a conservative approach to revenue projection, recognising that revenue projections are not about what the government want to collect but what it can collect, given the economic outlook and the government’s policy efforts,” the IFS stated.

The think tank stressed that the government must ensure macroeconomic stability by pursuing strong fiscal consolida­tion and significant reduction in monetary growth.

It said revenue growth must exceed what the country had seen in the past number of years.