Ghana’s Fiscal Consolidation Driven More by Expenditure Controls Than Revenue Overperformance – Nicholas Issaka Gbana
Development Economist and Chartered Accountant, Nicholas Issaka Gbana, has attributed Ghana’s recent fiscal consolidation gains largely to disciplined spending rather than revenue overperformance.
Speaking during the NorvanReports and Economic Governance Platform (EGP) X Space discussion on the topic “Cedi’s Comeback, Debt Reversal & Fiscal Hope: A Genuine Reset or Temporary Relief?”, Mr. Gbana highlighted that while revenues exceeded targets for the first half of 2025, the greater impact came from significant expenditure restraint.
“In terms of the fiscal support, it’s a combination of both the revenue side and the expenditure side. Overall, on the revenue side, we exceeded the half-year target by 3%, and on the expenditure side, we spent 15% less than what was projected,” he explained.
According to him, all major revenue handles—with the exception of petroleum receipts—performed above expectations. Non-tax revenue and grants were also among the outperformers.
Expenditure Control the Key Driver of Fiscal Surplus
Mr. Gbana emphasized that despite upward pressures on wages, overall expenditure discipline remained strong. He revealed that total government spending was approximately 85% of projected levels, with some expenditure items such as interest payments recording slight declines due to falling Treasury bill rates.
He warned, however, that wage pressures could present a fiscal risk going forward, particularly in light of ongoing labour demands for better remuneration packages.
“The risk would be especially along the wage side… we keep hearing about public sector workers going on strike for improved conditions. That definitely would be a risk going forward, and the Minister rightly recognized that,” he added.
Inflation Relief Felt Broadly, But Regional Disparities Remain
Touching on inflation trends, Mr. Gbana observed that the general disinflation is beginning to bring modest relief to Ghanaians, especially through reduced transport fares. However, he cautioned that regional inflation disparities remain.
“If you look at the regional dynamics, places like Upper West have a much, much higher inflation than the overall average. So while overall we’re looking good, region by region, the picture is different,” he pointed out.
Lending Rates on a Downward Path
On interest rates, he stressed the importance of the declining Treasury bill (T-bill) rates, noting their role in influencing lending rates more directly than the policy rate.
“At the end of December, the 91-day T-bill was around 28%, and by end-June, it had dropped to around 15%. Lending rates have also declined from 29.3% in December to 24% in June—a 5 percentage point drop,” he explained.
He expressed optimism that the Monetary Policy Committee (MPC) would eventually align the policy rate more closely with inflation and prevailing market conditions, further easing borrowing costs for businesses.
