Prof Quartey Backs Gov’t’s Fiscal Discipline but Warns Against Excessive Spending Cuts
Renowned economist and former head of the Institute of Statistical, Social and Economic Research (ISSER), Professor Peter Quartey, has endorsed the government’s expenditure management for the first seven months of 2025, describing a 5 per cent deviation from target as consistent with fiscal prudence.
His remarks come after the Bank of Ghana’s September 2025 Monetary Policy Report showed that total government spending amounted to GH¢131.1bn, or 9.4 per cent of GDP, below the GH¢152.6bn target (10.9 per cent of GDP). The outturn reflected a 14.1 per cent undershoot relative to target but represented a 9.3 per cent increase in nominal terms compared with the previous year.
Speaking in an interview, Prof Quartey said the government’s tighter expenditure control signalled a commitment to fiscal consolidation but cautioned that excessive restraint could dampen growth.
“A 5 per cent deviation is fine, but anything above that is significant,” he said. “If the government is not spending, it is restricting economic activity and limiting the economy’s ability to engage more people and create jobs. Some level of spending is necessary to stimulate growth.”
The economist warned that lower public spending does not automatically imply improved efficiency, noting that prolonged underspending could result in arrears and underfunded local institutions.
“Reduction in spending doesn’t necessarily translate into efficiency. There may be arrears or delayed transfers to MMDAs. Our street lights are not working, rivers are being polluted — there are visible signs that funding gaps persist,” he noted.
Prof Quartey urged policymakers to maintain fiscal discipline without undermining critical development outlays, arguing that well-targeted spending remains vital to sustaining growth momentum.
“We should be prudent, but also spend where necessary. Not spending beyond limits, but spending within limits,” he said.
Economists have welcomed the recent improvement in Ghana’s fiscal position, though many warn that sustained under-execution of expenditure could limit public investment at a time when the economy requires growth-supportive policies.
