Gov’t Must Address Inefficiencies in Public Spending, Says Development Economist
Development Economist Nicholas Issaka Gbana has called on the government to prioritise efficiency in public spending and project implementation, warning that increasing budget allocations without addressing systemic inefficiencies will not yield desired development outcomes.
Speaking during a NorvanReports and Economic Governance Platform (EGP) X Space Discussion on the theme “Ghana’s Economy: Is the Sun Rising?”, Mr Gbana pointed out that contrary to popular belief, the 2025 Budget Statement shows a significant increase in both government expenditure and revenue projections.
“The provisional outturn for expenditure in 2024 was GHS 248 billion, but the 2025 budget projects GHS 281 billion – a 13% increase. On the revenue side, we are seeing an expected increase from GHS 187 billion to GHS 225 billion, representing a 20% rise. So clearly, there’s no cut in expenditure as is being speculated,” he stated.
He noted, however, that the critical challenge remains the government’s ability to mobilise adequate revenue to meet these growing expenditure needs.
Touching on the agriculture sector, Mr Gbana stressed that investment in the sector is essential for food security but highlighted that spending alone is not enough.
“The issue for me is not the quantum of money being allocated, but the efficiency of spending, especially on the government’s side. Over the years, we have seen programmes funded by the World Bank, IFAD, and other development partners fail to fully disburse funds due to implementation bottlenecks,” he remarked.
He added that such inefficiencies often result in funding withdrawals, citing recent concerns over the World Bank reportedly suspending funding for tree crop projects due to mismanagement and personnel changes by government.
“We need to ensure that the teams responsible for implementing these projects are competent. If programmes are poorly run, the money simply will not come,” he warned.
On financial sector support for agriculture, Mr Gbana observed a continued reluctance by commercial banks to lend to the real sector, including agriculture, preferring instead to invest in government securities.
“Our banks continue to pack their balance sheets with government bonds and bills. We have not seen any significant lending into the real sector. That is a concern,” he noted.
He attributed the trend to historically high T-bill rates which have provided banks with safe and profitable alternatives to riskier lending, adding that the Bank of Ghana (BoG) must play a stronger regulatory role in ensuring more private sector credit.
“The central bank must show interest in how banks allocate their balance sheets. Lending is skewed toward the services sector with very little going into agriculture or manufacturing,” he said.
While acknowledging the roles of the Development Bank of Ghana and Ghana EXIM Bank in providing lower-cost credit, he emphasised that their impact remains limited due to inefficiencies in fund disbursement.
On infrastructure, Mr Gbana welcomed the government’s move to increase capital expenditure in the 2025 budget and legislative reforms that will channel more mineral royalties into infrastructure development. However, he cautioned that infrastructure investment must prioritise economic assets like roads and electricity over social projects if it is to truly spur growth.
“We saw how funds from the Ghana Infrastructure Investment Fund were used for Agenda 111 hospitals, which although important, deviated from the fund’s core purpose of supporting economic infrastructure,” he noted.
He further urged public institutions to improve transparency and regularly update their websites with current data, lamenting that many Ministries, Departments and Agencies (MDAs) host outdated or inactive websites.
“If we want citizens to be part of the monitoring process, they need access to up-to-date information. Otherwise, only a few will be able to hold government accountable,” he said.
He also welcomed the Finance Minister’s pledge to allocate at least 80% of the District Assemblies Common Fund (DACF) directly to local authorities, encouraging citizens to actively monitor how such funds are utilised at the local level.
“The assemblies must move beyond bricks-and-mortar projects and focus more on creating economic opportunities,” he advised.
Lastly, he urged continued enforcement of the Public Financial Management Act and supported the reactivation of surcharge powers by the Auditor-General to improve financial discipline in the public sector.
