ISSER Warns of Weak Structural Foundations in 2026 Budget Despite Fiscal Gains
The Institute of Statistical, Social and Economic Research (ISSER) has cautioned that Ghana’s medium-term growth outlook could be weakened by deepening structural challenges reflected in the 2026 Budget, despite notable improvements in fiscal consolidation and ongoing tax reforms.
Presenting its post-budget reflections, the Institute argued that the projected GDP growth rate of 4.8% for 2025 appears “a bit low” relative to the stronger outturns recorded in the first two quarters of 2025. It noted that the projection raises concerns about the robustness of the country’s economic drivers and the sustainability of the current recovery momentum.
A key area of concern highlighted by ISSER is the sharp slowdown in the construction subsector, a trend it warned could have far-reaching implications for private-sector efficiency and long-term competitiveness. The decline in capital expenditure — now at 1.7% of GDP compared to an average of over 10% in peer countries across the sub-region — was identified as a major constraint that could further erode productivity if not urgently addressed.
On fiscal consolidation, ISSER said that while improvements in interest payment obligations and reduced arrears have contributed to stabilisation efforts, the heavy reliance on cuts to capital spending remains problematic. It observed that although the revised fiscal council is a step in the right direction, stronger prioritisation of public expenditure is needed to entrench macroeconomic stability.
ISSER also noted that government’s much-touted “big push” for development is not adequately reflected in the budget, and emphasised that recent exchange rate stability must be carefully sustained to reinforce investor confidence.
Turning to agriculture, the Institute acknowledged recent production gains but warned that these improvements remain vulnerable unless structural bottlenecks across the value chain — including logistics, inputs, and market linkages — are addressed comprehensively.
On the revenue front, ISSER commended the reduction in effective tax rates resulting from ongoing VAT reforms, describing the adjustment as a “very positive” development that could support compliance and ease pressure on businesses. However, it raised concerns over the introduction of the new airport development levy, questioning whether adequate cost–benefit analysis had been conducted and whether the measure aligns with Ghana’s broader tourism development strategy.
The Institute further called for a national dialogue on education subsidies, noting that tightening fiscal conditions continue to strain government and public universities. It stressed that a more sustainable approach to funding is required to safeguard quality and access.
Concluding its assessment, ISSER urged government to scale up investments in research and development, particularly in renewable energy, arguing that such investments are critical for achieving Ghana’s future energy mix ambitions and strengthening long-term economic resilience.
