- IFS Says Ghana’s Budget Credibility at Risk as First-Half Spending Misses Programme by 20.60%
Ghana’s fiscal consolidation programme is facing a fresh test over the quality of government spending after expenditure fell GH¢35.60 billion below its first-half target, prompting the Institute for Fiscal Studies to warn that stronger headline fiscal numbers could come at the expense of growth and development if capital investment and priority payments continue to bear the burden of adjustment.
Government programmed expenditure of GH¢172.54 billion for the first six months of 2026. Actual spending was about GH¢136.94 billion, implying an undershoot of roughly 20.60% against the original first-half programme.
The size of the shortfall matters because Ghana is attempting to restore fiscal credibility while also lifting investment, improving infrastructure and sustaining economic recovery after years of severe macroeconomic pressure.
Speaking at a briefing on the 2026 Mid-Year Budget Review, Acting Executive Director of the IFS, Dr Said Boakye, said the weakness in expenditure execution raised questions about whether approved fiscal plans were translating into real economic activity.
“The considerable underspending in the first half of 2026 relative to budget plan not only undermined the budget’s credibility but more importantly it also left much to be desired in terms of growth and development of the country,” he said.
The criticism highlights an important distinction in Ghana’s fiscal recovery: spending less is not necessarily the same as spending better.
Expenditure restraint can help reduce deficits, contain borrowing needs and strengthen debt sustainability. But if consolidation is achieved substantially by delaying capital projects, withholding approved payments or slowing execution of development programmes, the improvement in the fiscal balance may come with an economic cost.
That is particularly important for capital expenditure.
Public investment in roads, energy, water, schools and other infrastructure can generate immediate demand while also improving the productive capacity of the economy. It can lower logistics costs, support private investment and improve the conditions under which businesses operate.
Persistent delays in these areas could therefore produce a stronger short-term fiscal position while weakening the foundations for medium-term growth.
The GH¢35.60 billion gap also raises a budget credibility question.
Businesses, contractors, investors and households make economic decisions partly on the assumption that expenditure approved in the national budget will broadly materialise. Large deviations between programmed and actual spending make the budget a less reliable guide to future economic activity.
IFS is consequently calling for stronger execution during the second half of the year, while recognising that any acceleration in spending must still be consistent with revenue performance, financing conditions and expenditure controls.
That creates a difficult balancing act.
Government cannot simply rush to spend the entire shortfall before year-end without risking procurement bottlenecks, weak project selection and pressure on cash management. But continued under-execution would deepen concerns that fiscal consolidation is being achieved partly by postponing obligations and investment.
IFS has also questioned how government managed financing resources during the first half of 2026.
Dr Boakye criticised the accumulation of resources in what he described as the “second fund”, arguing that the approach departed from the financing framework contained in the approved budget and complicated spending on important items.
“It is therefore regrettable that the government ignored the financing plan in the budget during the first half of 2026 by accumulating resources in the second fund, something that had not been planned for, creating complications for spending on important items like capital expenditure and various payments,” he said.
That criticism shifts the debate from the size of fiscal consolidation to the mechanics of public financial management.
For a government operating under tight financing constraints, cash-allocation decisions can have significant consequences across the economy. Accumulating financial resources may strengthen liquidity buffers, but if that happens while contractors, suppliers and public investment programmes remain unpaid, the fiscal restraint can transmit directly into private-sector cash flow.
Companies executing government contracts may postpone investment, delay payments to workers or suppliers and reduce activity when expected public payments do not arrive on time.
That effect can be especially significant in Ghana, where government remains a major purchaser of goods and services and where many businesses depend directly or indirectly on public contracts.
The composition of the GH¢35.60 billion shortfall is therefore as important as the headline number.
If much of the underspending reflects genuine efficiency savings, lower-than-expected costs or successful elimination of waste, the fiscal impact could be positive. If it is concentrated in infrastructure, development programmes and legitimate obligations already approved, the implications for growth are more troubling.
The IFS intervention comes at a critical stage in Ghana’s fiscal recovery.
After years of large deficits, rising debt and restricted access to international capital markets, government has strong incentives to demonstrate discipline. But as macroeconomic stability improves, the quality of adjustment will increasingly matter as much as the size of the adjustment itself.
Fiscal credibility is not built simply by recording a lower deficit.
It also depends on whether budgets are realistic, whether spending plans are executed predictably and whether deviations from approved programmes are transparently explained.
For investors and development partners, that distinction is important because a credible budget serves as a signal of how government intends to mobilise and deploy resources across the economy.
For businesses and households, the consequences are more immediate. Budget execution can determine whether roads are completed, contractors are paid, infrastructure projects move forward and public services improve.
The challenge for government in the second half of 2026 is therefore not to spend for the sake of closing the gap. It is to demonstrate that fiscal consolidation can coexist with credible and productive expenditure.
That means protecting high-value capital investment, settling legitimate obligations on time and ensuring that any deviation from the approved budget is driven by economic justification rather than weak execution.
The IFS warning ultimately points to a broader test of Ghana’s fiscal recovery.
The country has made restoring discipline a central policy objective. The next question is whether that discipline can be sustained without weakening the investment and development spending required to support long-term growth.
A credible fiscal programme must do both.
