Ghana’s 2026 Budget has come under fresh scrutiny as a new review reveals that the government implemented steep reductions in capital expenditure and spending on goods and services during the first nine months of 2025—cuts that analysts warn could have long-term implications for growth, public investment, and service delivery.
According to the Centre for Policy Scrutiny (CPS), the government budgeted GH¢26.59 billion for capital expenditure for 2025 but managed to spend only GH¢11.01 billion, leaving a staggering shortfall of GH¢15.58 billion, or nearly 60% of the target.
Goods and services spending also fell sharply, undershooting the GH¢5.06 billion allocation by GH¢1.25 billion, representing a 25 per cent contraction.
CPS analysts say these underspends reflect “a highly restrictive budget execution” during the first three quarters of 2025, driven largely by weak revenue performance.
The review notes that revenue collections lagged budget expectations by GH¢7.7 billion by September, forcing the government to compress expenditure to avoid breaching its fiscal deficit target.
The findings—compiled by Dr Adu Owusu Sarkodie, Dr Prince Adjei, Dr Jacob Novignon, and Miss Stephanie Anokyewa Tawiah, and presented by Dr Sarkodie—warn that such deep cuts, especially in capital expenditure, may have slowed ongoing infrastructure works, delayed procurement, and constrained essential public services.
Revised figures show that capital spending for the full year was expected to reach GH¢23.86 billion, still GH¢8.80 billion (26.9 per cent) below the revised mid-year estimate of GH¢32.66 billion.
Yet, in a striking shift, the 2026 Budget plans a dramatic rebound.
Capital expenditure is projected to surge by an unprecedented 141 per cent to GH¢57.5 billion, accounting for 19 per cent of total expenditure—more than double the share recorded in the 2025 mid-year budget.
CPS describes the turnaround as bold but cautions that it depends heavily on the government’s ability to secure the revenues needed to fund it.
Despite the challenges, CPS praised the government for strong macroeconomic gains achieved in 2025. Notably, inflation dropped from 32.1% in December 2024 to 8 per cent by October 2025—the sharpest fall in two decades—driven by what CPS called a “rare alignment” of monetary and fiscal policy.
The Bank of Ghana’s decision to cut the policy rate from 28 per cent to 21.5 per cent eased liquidity constraints, lowered borrowing costs, and improved credit conditions for businesses. Gross international reserves climbed to an estimated US$12 billion, helping stabilise the cedi and strengthening external buffers ahead of 2026.
“These gains give the government credible room to pursue growth,” CPS said.
“If stability continues, it can support job creation, stimulate investment and restore confidence in the broader economy.”
However, the think tank warned that the success of the 2026 Budget hinges almost entirely on whether the government can meet its ambitious revenue target of GH¢268 billion, an 18.4% increase over projected 2025 collections.
CPS expressed doubt, citing a Ghana Revenue Authority (GRA) budget increase of only 1.5 per cent—insufficient, analysts say, to implement enhanced enforcement, AI-driven customs reforms, and expanded VAT coverage.
“The GRA cannot deliver enhanced enforcement, AI-driven reforms and wider VAT coverage on a shoestring budget,” said co-author Dr Prince Adjei. “If the revenue measures fail, the spending plans collapse with them.”
The 2026 Budget prioritises infrastructure development with a GH¢30 billion allocation for the continuation of Big Push road and bridge projects, along with new investments in urban transport, rural electrification, water and sanitation, and district-level housing.
CPS noted that 14 major infrastructure projects have been carried over from previous budgets but welcomed the continuity, arguing that consistent funding is critical to prevent abandoned projects.
“The infrastructure drive is essential and overdue,” said Dr. Jacob Novignon.
“Roads, energy, housing and digital infrastructure are key enablers of growth. What matters now is securing funding and ensuring value for money.”
Human capital development also features prominently. Allocations for Free SHS, TVET expansion, Agenda 111 hospitals, teacher training, and digital learning exceed GH¢50 billion.
The budget outlines job-creation programmes, including the Oil Palm Development Programme, expected to create 250,000 jobs, and the establishment of three garment factories projected to provide more than 20,000 direct employment opportunities.
CPS commended these initiatives but stressed that structural reforms and sustained macroeconomic stability remain essential to unlock private sector investment.
But while expansionary budgets can stimulate growth, CPS warns they can also destabilise markets if revenue falls short.
Dr. Sarkodie noted that aggressive spending combined with uncertain revenue could force the government to borrow more on the domestic market, potentially pushing up interest rates, crowding out private sector credit, and unsettling investor confidence.
“An expansionary fiscal stance can be a powerful tool for growth, but without careful execution, it may backfire,” Dr. Sarkodie said. “Higher borrowing requirements can lead to upward interest rate adjustments, which could negatively affect businesses, investors and consumers.”
CPS further cautioned that overly optimistic fiscal assumptions could trigger volatility in Ghana’s capital markets and put pressure on the cedi if investors lose confidence.
“Market stability is fragile and can be easily affected by fiscal signals,” the review warned.
“Government must communicate realistic assumptions, implement strong monitoring mechanisms, and ensure borrowing is carefully managed.”
The report concludes that while the 2026 Budget has the potential to accelerate Ghana’s economic recovery, achieving its objectives will require disciplined revenue mobilisation, prudent borrowing, and strict oversight of major projects.
“Ambition must be balanced with caution,” Dr. Sarkodie said. “Unchecked expansionary policies without credible revenue strategies could threaten market stability and compromise the country’s economic trajectory.”
