Capital expenditure slumped by 60.6%—equivalent to a GH¢10.95 billion shortfall—in the first half of 2025.
Arrears payments also lagged by 36.2%%, threatening contractor liquidity and raising risks of non-performing loans in the banking sector.
The development, according to the Institute for Fiscal Studies (IFS), highlights deepening fiscal vulnerabilities that risk derailing the country’s economic recovery.
At a press conference in Accra, IFS Research Fellow Leslie Mensah painted a sobering picture of the government’s mid-year fiscal review, warning that persistent revenue underperformance, mounting arrears, and unrealistic targets threaten to undo recent signs of macroeconomic stability.
Revenue ambitions at risk
Government projected total revenue and grants at GH¢229.95 billion, or 16.4% of Gross Domestic Product (GDP), largely anchored on a new GH¢1 petroleum levy under the Energy Sector Levies Act (ESLA).
But, IFS stressed that this optimism overlooks glaring shortfalls in the first half of the year.
Oil revenue, for example, was 42.9% below target, yet the government retained its original projection in the mid-year budget.
Import duties and non-tax revenues also underperformed but remained unchanged in the revised outlook.
“With revenue already GH¢3.24 billion below target halfway through the year, the government must not only close the gap but also meet its ambitious second-half targets—a task that is unlikely to be achieved,” Mensah cautioned.
GH¢2.9bn domestic revenue shortfall
Domestic revenue alone missed its mark by GH¢2.90 billion, while foreign grants fell 31.7 per cent below expectations.
Big push agenda stalled
The sharp shortfall in revenues has already undermined key government programmes.
Even the Ghana Gold Board (GoldBod), touted as a major initiative to bolster state participation in the gold trade, did not receive its programmed GH¢4.55 billion seed funding.
The IFS argued that the revised revenue targets are overly ambitious.
Ghana, Mensah noted, has consistently struggled to raise revenues beyond 16% of GDP over the past decade, despite repeated tax measures.
Against this backdrop, the Think Tank said the 2025 target of 16.4%of GDP appears “unrealistic and unattainable.”
Weak financing conditions
Beyond revenues, the government also faced challenges in securing financing for its programmes.
The IFS revealed that less than half of the planned budget financing was realised in the first half of 2025.
This forced the government to scale back spending, producing a lower-than-planned fiscal deficit.
But the think tank stressed that this fiscal restraint was not the result of deliberate policy discipline.
Instead, it was “forced austerity” brought on by weak revenues and harsh financing conditions.
Risks of rushing to the bond market
The IFS issued its strongest caution yet on debt management, warning against a premature return to the international bond market.
Ghana’s temporary reduction in borrowing, it said, helped ease pressure on interest rates in the domestic market.
“Resuming Eurobond borrowing at this stage would sharply worsen Ghana’s already high debt levels and could plunge the country into another debt crisis,” Mensah warned.
Instead, the Institute urged the government to focus on restructuring its revenue strategy and mobilising resources locally, particularly from the extractive sector.
Rethinking revenue mobilisation
According to the IFS, Ghana’s persistent revenue shortfalls echo the struggles of successive administrations and require a bold reset.
Mensah argued that the country must shift from concession-based mineral agreements to production sharing arrangements or direct state participation in extractive industries.
He explained that such reforms would not only boost fiscal revenues but also strengthen foreign exchange inflows, providing much-needed support to the cedi.
“The Gold Board merely trades in produced gold and disregards the concept of public endowment of our mineral resources,” he said.
“If the state held majority stakes or adopted production sharing, the need for such an institution would be greatly diminished.”
Transparency and fiscal accountability
The IFS also demanded full transparency in the government’s fiscal reporting.
It specifically called for interventions such as the recapitalisation of the National Investment Bank (NIB) to be reflected in the fiscal accounts.
Recognising such expenditures, the Institute argued, would give a clearer picture of the state’s commitments and help strengthen accountability.
Precarious outlook
Despite some macroeconomic gains, the IFS warned that the outlook for Ghana’s fiscal position remains precarious.
Without decisive reforms, it said, critical investments would remain underfunded, arrears would accumulate, and the temptation to seek quick fixes from the bond market could expose the country to renewed vulnerabilities.
“Without a fundamental shift in strategy, weak revenues and unrealistic targets outlined in the 2025 Mid-Year Fiscal Policy Review could derail Ghana’s recovery,” Mensah concluded.
