- Fiscal Recovery Needs Better Spending, Not Just Cuts — ISSER
Ghana must move beyond simply cutting expenditure and focus more aggressively on the quality and economic return of every cedi spent if the country is to sustain fiscal consolidation and protect its recent macroeconomic gains, the Institute of Statistical, Social and Economic Research has said.
Speaking at ISSER’s Post-Mid-Year Budget Review Forum, the Institute’s Director, Professor Robert Darko Osei, argued that expenditure efficiency should become a central pillar of fiscal policy at a time when government has limited room to expand spending without creating fresh budgetary pressure.
“Fiscal consolidation, in the face of tight fiscal space, is not only about reducing expenditure. It is also about the efficiency of spending,” Professor Osei said.
His argument shifts the fiscal debate from the size of public expenditure to the productivity of that expenditure.
For a government operating under tight financing conditions, simply reducing nominal spending may help contain deficits in the short term, but it does not automatically improve the economy’s productive capacity or create the conditions needed to sustain stronger revenues over time.
ISSER’s position is that fiscal consolidation will be more durable if government directs scarce resources towards projects capable of generating stronger economic returns, improving productivity and supporting private-sector activity.
Infrastructure is one of the clearest areas where that principle applies.
Professor Osei said government should prioritise completing existing projects before committing significant resources to new ones. Road and expressway projects that are already under construction, for example, may deliver greater immediate value if they are brought to completion rather than leaving capital tied up in partially finished infrastructure while additional projects are started elsewhere.
That approach could also help address one of the persistent weaknesses in public investment management: the accumulation of incomplete projects whose economic benefits remain unrealised despite substantial expenditure already incurred.
An unfinished road may have absorbed significant public resources without yet reducing transport costs, improving market access or supporting commercial activity. Completing it can therefore convert previously committed expenditure into a productive asset.
The recommendation is particularly relevant as Ghana attempts to preserve macroeconomic stability while still financing infrastructure, social programmes and other development priorities.
The country’s recent economic adjustment has placed strong emphasis on fiscal discipline, with policymakers seeking to contain deficits, manage debt vulnerabilities and restore confidence after a period of severe macroeconomic instability.
But expenditure compression itself can create risks if investment spending is cut indiscriminately.
Reducing capital spending may improve the fiscal numbers in the immediate term while weakening long-term growth if economically important infrastructure is delayed or abandoned.
ISSER’s argument therefore suggests a more selective approach: government should distinguish between low-value expenditure that can be reduced and productive investment that should be protected or accelerated.
That requires stronger project appraisal.
Public investment decisions would need to be assessed not simply on political visibility or the amount allocated in the budget, but on expected economic returns, completion timelines, financing requirements and the wider benefits generated for households and businesses.
Projects that reduce logistics costs, improve access to productive areas, unlock private investment or raise the efficiency of public services may deserve greater priority than projects with weaker economic justification.
Spending efficiency also has implications for Ghana’s limited fiscal space.
Where government can generate more economic value from the same amount of expenditure, it effectively creates room for additional priorities without necessarily increasing the overall spending envelope.
That matters in an environment where higher borrowing to finance new expenditure could undermine efforts to stabilise public finances.
The message also extends beyond capital projects.
Efficiency in recurrent spending, procurement, public administration and social interventions will determine how much government can achieve with existing resources.
Leakages, duplication, weak procurement and poorly targeted programmes can erode the value of public spending even where aggregate expenditure remains within budget.
Improving these areas could therefore contribute to fiscal consolidation without relying entirely on expenditure cuts.
For investors, the distinction is important.
Markets generally assess fiscal credibility through indicators such as deficits, debt dynamics and financing requirements, but the composition and quality of spending also matter for long-term economic performance.
A country that reduces deficits while underinvesting in productive infrastructure may achieve temporary fiscal stability without creating sufficient growth to strengthen the revenue base.
By contrast, well-targeted investment can support productivity, expand economic activity and ultimately improve government revenues, making fiscal consolidation more sustainable.
ISSER’s intervention comes as economists continue to assess the 2026 Mid-Year Budget Review and whether the government can preserve recent improvements in inflation, exchange-rate stability and fiscal performance while meeting development needs.
The challenge is increasingly one of allocation rather than simply restraint.
Government faces competing demands from infrastructure, healthcare, education, social protection and other sectors, while the resources available to finance those priorities remain constrained.
That makes the opportunity cost of inefficient expenditure significantly higher.
Every cedi directed towards a poorly designed or unfinished project is a cedi unavailable for a potentially higher-return investment elsewhere.
ISSER’s recommendation therefore speaks to a broader principle of public finance: successful consolidation is not measured only by how much government spends less, but by how effectively the resources it continues to spend are converted into economic and social outcomes.
For Ghana, sustaining the recovery will require fiscal discipline, but discipline alone will not be enough.
The stronger test will be whether the government can identify the investments that matter most, complete what it has already started and ensure that every additional cedi of public expenditure produces measurable value for the economy.
