Ghana's government underspent its 2026 budget by GHS 35.6 billion in the first half of the year. This significant shortfall, representing 20.6 percent of planned expenditure, undermines the credibility of the government's fiscal plans.
The Institute for Fiscal Studies (IFS) highlighted this poor budget execution after the Finance Minister presented the 2026 Mid-Year Budget Review. Total government expenditure from January to June stood at GHS 136.94 billion, against a budgeted GHS 172.54 billion. This under-execution particularly affected critical areas like capital expenditure and payments to government contractors.
This development fits into a broader pattern of fiscal challenges Ghana faces, impacting economic stability and investor confidence. Consistent under-execution of budgets can slow down infrastructure development and delay payments to businesses. Such issues complicate the government's efforts to manage public finances and stimulate economic growth effectively.
Dr. Said Boakye, Executive Director of the IFS, stated that the under-execution of expenditure items is concerning. He noted that arrears payments provide liquidity to government contractors and suppliers. Capital expenditure is also crucial for economic growth and national development.
The implications are far-reaching, potentially affecting Ghana's economic growth trajectory and the government's ability to meet its development goals. Decision-makers will need to address these execution gaps to restore confidence in the country's fiscal management. Markets will closely watch how the government responds to these criticisms and implements corrective measures.
The IFS analysis revealed that capital expenditure recorded a substantial shortfall. Actual spending was GHS 22.18 billion, far below the GHS 36.56 billion target. This represents a GHS 14.38 billion, or 39.3 percent, reduction in planned capital investments. Such cuts can delay vital projects and hinder long-term economic expansion.
Arrears clearance also fell significantly short of its target. Net arrears clearance reached GHS 5.34 billion, compared to a GHS 13.98 billion target. This means only 38.2 percent of planned arrears were cleared, impacting businesses relying on government payments. Delayed payments can create cash flow problems for many local enterprises.
The IFS also questioned the government's economic growth projections. Non-oil real GDP growth declined from 7.1 percent in the fourth quarter of 2025 to 6.3 percent in the first quarter of 2026. Despite this, the government maintained its 2026 real GDP growth projection at 4.8 percent in the mid-year review. The IFS argued this projection should have been revised upwards, given that Ghana's economy grew by 6.0 percent in 2025 and 6.4 percent in the first quarter of 2026. This suggests a disconnect between official forecasts and actual economic performance.
Furthermore, the Institute described the government's 16.8 percent target for total revenue and grants as a share of GDP as unrealistic. Ghana has consistently failed to achieve similar projections in recent years. This pattern raises doubts about the feasibility of current revenue targets and the sustainability of public finances.
The IFS identified inconsistencies in some fiscal data within the mid-year budget review. For example, the stated first-half revenue and grants target of GHS 126.14 billion did not match the sum of individual revenue components. The IFS calculated these components at GHS 125.43 billion, creating an unexplained difference of about GHS 712.43 million. Such discrepancies can erode public trust in official financial reporting.
Another major concern is the lack of a clear strategy for generating fiscal revenue from Ghana's small-scale gold mining sector. Small-scale mining accounted for about 51.5 percent of Ghana's gold exports in 2025. However, the sector generated little fiscal revenue compared to its contribution to gold production and exports. The IFS urges the government to develop a strategy ensuring the state receives a fair share of revenue from this significant sector. This would boost government coffers and improve resource management.
The IFS recommends that the government improve budget execution by implementing approved expenditures as planned. This should happen unless genuine revenue or financing constraints make it impossible. They also call for more evidence-based economic forecasting. This includes independent review of government projections before they are incorporated into the national budget. Strengthening data validation and verification is also crucial to eliminate inconsistencies in fiscal reporting. These steps are vital for Ghana's economic stability and future development.