- ISSER Urges Government to Raise Capital Spending to Support Businesses
Ghana’s fiscal consolidation is improving the government’s headline balances, but a shortfall in capital spending is raising questions about whether the adjustment is leaving enough investment to support businesses and productivity.
Professor Robert Darko Osei, director of the Institute of Statistical, Social and Economic Research (ISSER), says capital expenditure in the first half of 2026 was more than 40% below target. He argues that continued reliance on cuts to investment risks weakening the infrastructure businesses need to operate efficiently.
“We are not doing the infrastructure for the sake of infrastructure. We are doing the infrastructure to support the ecosystem within which businesses operate,” he said.
The gap is significant because the government’s 2026 Budget set out an ambitious investment programme. It projected capital expenditure of GH¢57.5 billion for the year, including GH¢30 billion for roads under the Big Push programme.
But the first-half figures cited by ISSER show the distance between budgeted investment and the pace of execution.
The issue is not only how much the state spends. It is also whether public projects reduce the costs that constrain private firms. Reliable roads and transport links can lower delivery times; energy infrastructure can reduce interruptions and operating costs; water, sanitation and digital networks can help businesses expand beyond the largest cities.
When these services are inadequate, firms may have to provide their own power, logistics or facilities, tying up capital that could otherwise fund production, technology or jobs.
That is the economic logic behind ISSER’s call. Public investment can support private activity by supplying infrastructure that individual businesses cannot efficiently build alone. But the returns are not automatic.
Poorly selected or delayed projects can absorb public money without improving the business environment.
The fiscal context complicates the argument. Ghana has spent much of the past several years rebuilding confidence after a severe economic crisis.
The 2026 Budget targets a primary surplus of 1.5% of gross domestic product, while the government and the International Monetary Fund’s Policy Coordination Instrument envisage a lower surplus of 0.5% of GDP from 2027, subject to continued revenue and public-financial-management reforms.
That framework aims to preserve debt sustainability while making space for priority development spending.
This leaves policymakers with a difficult sequencing problem: maintain fiscal discipline while ensuring that the investment component of the budget is not repeatedly sacrificed when spending comes under pressure.
A primary surplus does not by itself show whether the composition of public spending is supporting future growth. Nor does a larger capital budget guarantee that roads, schools or utilities will be completed on time or deliver value.
The data also needs to be read with care. The first-half comparison is against the government’s programmed target. Subsequent fiscal data show capital expenditure had reached 1.5% of GDP by July, up from 0.7% over the same period in 2025, although it remained below the programmed level.
That suggests capital spending was recovering year on year even as it lagged behind the plan. The policy challenge is therefore not simply to reverse cuts, but to improve the pace and quality of execution.
ISSER’s warning echoes its earlier assessment that fiscal restraint had fallen disproportionately on capital investment.
The Institute has argued that stabilisation efforts should extend beyond spending reductions to better allocation of limited resources, with priority given to projects that deliver the greatest economic returns.
It has also urged government to weigh new projects against completing existing high-impact ones.
For businesses, slow public investment can create uncertainty. Contractors and suppliers may wait for payments or project approvals; manufacturers may face transport or power bottlenecks; smaller firms may struggle to reach markets.
Yet indiscriminate spending increases could create new fiscal pressures, particularly if projects are not properly appraised, financed and monitored.
The answer is not to measure success by the volume of capital expenditure alone. Government would need to show that projects are selected on economic grounds, have credible financing and procurement plans, and are tracked from approval through completion.
Publishing clear project-level data could help Parliament and the public distinguish between an investment that is temporarily delayed and one that is persistently under-executed.
The distinction matters for the private sector. Businesses need predictable infrastructure delivery, not only announcements. A road project that remains unfinished or an energy upgrade delayed beyond schedule may create costs for years.
Conversely, a completed project can reduce operating costs and open up new commercial opportunities. The impact should ultimately be measured in better connectivity, lower production costs and stronger productivity—not merely in budget releases.
Revenue mobilisation remains part of the solution. If the government can collect more revenue sustainably and improve spending efficiency, it can protect priority investment without undermining the fiscal anchors.
But greater revenue alone will not guarantee results if implementation capacity, procurement controls and project management remain weak.
The 2027 Budget will provide an important test. Ghana is seeking to preserve macroeconomic stability while raising employment, expanding production and supporting businesses.
If capital expenditure again falls well below its allocation, the government will need to explain whether the shortfall reflects deliberate reprioritisation, funding constraints or delays in project execution and what that means for the growth agenda.
ISSER’s argument is ultimately about the quality of the recovery. Fiscal stability can reduce uncertainty and help restore investor confidence, but businesses also require the physical and institutional conditions to invest and grow.
The choice facing government is not simply between discipline and development. It is whether public investment can be delivered efficiently enough to support both.
