Mid-year economic reset: gains, gaps and next steps

A national budget is far more than an account of projected revenue and planned expenditure. It is a statement of national priorities, a framework for government action, a guide for business planning, a signal to investors and a major determinant of the economic wellbeing of households.

The full year 2026 Budget, presented in 2025, set out Ghana’s agenda for economic stabilisation, fiscal discipline, infrastructure expansion, employment creation and social development. The 2026 Mid Year Fiscal Policy Review, presented to Parliament on 23 July 2026 under the theme, “Resetting for Growth, Jobs and Economic Transformation,” examined the progress made in implementing these commitments during the first half of the year.

The Review offered a generally positive assessment of the economy, highlighting stronger growth, declining inflation, a reduction in public debt, lower interest rates and renewed investor confidence. It also introduced a strategic realignment of existing budgetary resources towards pressing national priorities, including flood control, public transportation, infrastructure development, energy security and debt repayment.

One of the most significant features of the Review was Government’s decision not to seek a supplementary budget. Instead, it retained the expenditure ceiling approved under the 2026 Appropriation Act and redirected available resources to address emerging economic and social needs. This approach reflects an effort to balance fiscal discipline with the flexibility required to respond to urgent national challenges.

Nevertheless, the success of the Budget Review cannot be judged solely by improvements in economic indicators. Its true value must be measured by its impact on everyday life. Businesses must be able to grow, investors must be confident enough to commit capital, young people must gain access to decent employment and households must be able to afford food, transportation, electricity, healthcare, education and housing.

This article examines the most important narratives in the 2026 Mid-Year Budget Review and their implications for Government initiatives, businesses and corporate organisations, investors, households and consumers.

Highlights of the Mid-Year Review

The central message of the Review is that Ghana is moving from economic stabilisation towards growth and transformation.

Several macroeconomic indicators performed better than the expectations contained in the original 2026 Budget. Real economic growth exceeded the full year target during the first quarter, inflation declined substantially, public debt approached the statutory ceiling and interest rates moved downwards.

These improvements are significant. However, economic stabilisation is only the foundation. The next challenge is converting stability into productive investment, competitive businesses, sustainable employment and improved household welfare.

Citizens do not experience fiscal consolidation through statistics alone. They experience it through:

1. Affordable food and transportation.
2. Accessible business and household credit.
3. Stable electricity and water supply.
4. Reliable public services.
5. Sustainable employment opportunities.
6. Improved roads and drainage infrastructure.
7. Protection of wages, pensions and savings from inflation.

2. Fiscal Discipline without Additional Appropriation

The decision not to request a supplementary budget was one of the most important signals in the Review.

Rather than expanding total expenditure, Government chose to redistribute resources within the existing budget. This could strengthen fiscal credibility by demonstrating that urgent needs can be addressed without abandoning the expenditure limits approved by Parliament.

The Review also reaffirmed the fiscal rule requiring:

1. A minimum annual primary surplus of 1.5 per cent of GDP.
2. A public debt ceiling of 45 per cent of GDP by 2034.

Government further established the Fiscal Council and the Value for Money Office to strengthen oversight, transparency and accountability.

State-owned enterprises were also brought under the Commitment Authorisation regime. This is intended to prevent ministries, departments, agencies and public enterprises from entering into contracts without confirmed budgetary provision.

The measure could reduce:

1. Unauthorised commitments.
2. Accumulation of arrears.
3. Abandoned public projects.
4. Unplanned public debt.
5. Financial losses within state-owned enterprises.

Fiscal discipline must, however, go beyond controlling expenditure. It must ensure that every cedi spent produces measurable public value.

3. Stronger than Expected Economic Growth

The original 2026 Budget projected real GDP growth of at least 4.8 per cent. The Mid-Year Review reported that the economy expanded by 6.4 per cent during the first quarter of 2026.

Non-oil GDP grew by 6.3 per cent, exceeding the full-year target of 4.9 per cent.

This is important because it suggests that economic activity was not being driven exclusively by petroleum production. Growth in agriculture, manufacturing, construction, transportation, trade and services has the potential to create broader employment and income opportunities.

However, economic growth must be examined carefully. A country may record impressive GDP growth without a corresponding improvement in household welfare.

For growth to become meaningful, it must:

1. Create sustainable employment.
2. Support micro, small and medium sized enterprises.
3. Increase agricultural productivity.
4. Encourage local manufacturing.
5. Strengthen household incomes.
6. Improve public services.
7. Reduce poverty and inequality.

The success of the Review will therefore depend on whether the 6.4 per cent growth rate becomes visible in the experiences of workers, farmers, traders, entrepreneurs and young people.

4. Falling Inflation and the Cost of Living

Inflation declined from 23.8 per cent in December 2024 to 5.4 per cent at the end of 2025. It remained within approximately 5.3 per cent to 5.7 per cent by June 2026.

Lower inflation improves economic predictability. Businesses can prepare budgets, negotiate contracts and price goods with greater confidence. Employees, pensioners and households also experience a slower erosion of their incomes and savings.

However, lower inflation does not mean that prices have returned to their previous levels. It means that the rate of price increases has slowed.

For example, a food item that increased from GH¢20 to GH¢35 during a period of high inflation may continue to cost GH¢35 or more even after inflation declines. The price is still high, but it is rising more slowly.

The practical benefit of lower inflation will therefore depend on whether:

1. Wages and salaries increase reasonably.
2. Food production improves.
3. Transport costs decline.
4. Electricity and fuel prices become more stable.
5. Competition prevents unjustified price increases.
6. Household employment and income opportunities expand.

5. Lower Interest Rates and Access to Credit

The decline in interest rates was another significant feature of the Review.

The Monetary Policy Rate declined from 27 per cent in January 2025 to 14 per cent in July 2026.

The 91 day Treasury Bill rate declined from 11.09 per cent in December 2025 to approximately 5.73 per cent in June 2026. The 182 day Treasury Bill rate fell from 12.52 per cent to approximately 7.69 per cent.

These reductions indicate that Government’s domestic borrowing costs are declining.

When Treasury Bill rates are high, banks may prefer to lend to Government rather than to businesses because Government securities offer attractive returns with relatively lower risks. When those rates fall, banks have stronger incentives to provide credit to private enterprises.

Lower rates could support investment in:

1. Machinery and equipment.
2. Business inventories.
3. Commercial vehicles.
4. Agricultural production.
5. Technology and digitalisation.
6. Housing and mortgages.
7. Education.
8. Household enterprises.

Nevertheless, the benefits will not be fully realised unless commercial banks reduce their lending rates. Lower policy rates must be transmitted to businesses and consumers rather than remaining only within financial markets.

6. Revenue Mobilisation through Technology

The Review reinforced the tax reform agenda introduced under the full year Budget.

Government had abolished:

1. The Electronic Transfer Levy.
2. The Betting Tax.
3. The COVID 19 Health Recovery Levy.
4. The Emissions Levy.
5. Value Added Tax on motor insurance.

The effective VAT rate was reduced from approximately 21.9 per cent to 20 per cent.

The VAT registration threshold was also increased from GH¢200,000 to GH¢750,000. This could remove many smaller enterprises from compulsory VAT registration and reduce their compliance costs.

Government is increasingly relying on technology to strengthen revenue administration.

Fiscal Electronic Devices are being introduced to record transactions and reduce VAT leakages. A cross-border VAT collection system for non-resident digital platforms is projected to generate approximately GH¢2.3 billion during its first full year.

The Publican artificial intelligence customs system had reportedly analysed approximately 366,000 import declarations by July 2026 and increased assessed customs revenue by more than US$300 million.

This represents a change in revenue philosophy. Instead of relying mainly on higher tax rates, Government is seeking to:

1. Improve compliance.
2. Broaden the tax base.
3. Close revenue loopholes.
4. Reduce under declaration.
5. Monitor digital transactions.
6. Prevent customs fraud.

Technology can improve efficiency, but businesses must receive adequate education and support. Digital systems must also be transparent, reliable and protected against arbitrary assessments.

7. Infrastructure Moves from Promise to Implementation

The Big Push Infrastructure Programme was one of the flagship initiatives in the full year 2026 Budget.

The Mid-Year Review reported that work had commenced on 87 projects across all sixteen regions. These included:

1. Seventy-four trunk roads and bridges.
2. Ten urban road projects.
3. Three feeder road projects.

By the end of June 2026, thirteen projects had reportedly reached at least 50 per cent completion, while six had exceeded 75 per cent completion.

The proposed Accra to Kumasi Expressway was described as a 176 kilometre, six lane road expected to reduce travelling time between Ghana’s two largest commercial cities to approximately two hours.

Improved roads could:

1. Reduce travelling time.
2. Lower vehicle maintenance costs.
3. Improve access to markets.
4. Facilitate agricultural transportation.
5. Strengthen regional trade.
6. Attract businesses to underserved communities.
7. Improve access to schools and hospitals.

The important issue is not only the number of projects commenced, but the quality, cost and completion of those projects.

9. Flood Control Becomes an Economic Priority

Following serious flooding in June 2026, Government realigned GH¢350 million for emergency response and an additional GH¢226 million for flood control and mitigation.

These resources are expected to support:

1. Humanitarian relief.
2. Restoration of damaged public infrastructure.
3. Dredging of drains and water channels.
4. Construction of critical drainage systems.
5. Flood prevention and climate resilience.

Flooding is not merely an environmental problem. It is also a major economic and fiscal problem.

Floods destroy homes, shops, vehicles, roads and business inventories. They disrupt transportation, reduce productivity, increase public health risks and force Government to spend resources on emergency relief and reconstruction.

Long term flood control must therefore include:

1. Enforcement of planning regulations.
2. Protection of waterways.
3. Regular dredging and drain maintenance.
4. Improved waste collection.
5. Removal of unlawful structures from flood prone areas.
6. Investment in modern drainage systems.

Emergency spending after floods is necessary, but prevention is less expensive and more sustainable.

What Government Must Do Next

To convert economic stability into shared prosperity, Government should prioritise the following actions:

1. Ensure that lower policy rates translate into lower commercial lending rates.
2. Publish regular implementation reports on all major infrastructure projects.
3. Protect the Sinking Fund and use it strictly for debt repayment.
4. Accelerate the acquisition and deployment of public transport buses.
5. Provide clear guidelines and education on new VAT, customs and digital tax systems.
6. Strengthen consumer protection and market competition.
7. Enforce planning regulations and protect waterways from unlawful development.
8. Link economic growth to employment, industrialisation and household income.
9. Strengthen accountability within district assemblies and state-ownedMid-Year enterprises.
10. Ensure that public expenditure produces measurable value for citizens.

 Conclusion

The 2026 Mid-Year Fiscal Policy Review presents an encouraging account of stronger economic growth, declining inflation, lower interest rates, improving debt sustainability and renewed investor confidence.

It also demonstrates continuity between the full year 2026 Budget presented in 2025 and Government’s priorities during the first half of 2026. Instead of seeking a supplementary appropriation, Government retained the approved expenditure envelope and redirected resources towards flood control, public transportation, infrastructure, energy security and future debt repayment.

For Government, the Review demands greater fiscal discipline, transparency and effective implementation.

For businesses and corporate organisations, it offers reduced tax burdens, greater price stability, potentially cheaper credit and improved infrastructure. At the same time, it requires stronger tax, customs and regulatory compliance.

For investors, the Review provides evidence of improving debt management, renewed domestic bond market activity and opportunities in infrastructure, energy, petroleum, transportation and technology.

For households and consumers, it offers the prospect of lower inflation, improved transportation, better roads, reduced borrowing costs and increased employment opportunities.

However, the strength of a national budget cannot be determined only by GDP growth, debt ratios, inflation figures or fiscal balances. It must be judged by the quality of life of ordinary citizens.

The true test of the Mid Year Review will be whether market women can protect their trading capital, companies can expand production, farmers can access markets, investors can commit resources confidently, young people can secure decent employment and households can afford food, transport, housing, education, healthcare and electricity.

Ghana appears to have made important progress towards economic stabilisation. The next responsibility is to transform that stability into inclusive growth, productive employment and shared prosperity.

The objective must not merely be to produce stronger economic statistics. It must be to build a stronger economy that works for Government, businesses, investors and every Ghanaian household.

By Prof. Samuel Lartey