Although the World Bank has recognized the government’s fiscal consolidation efforts, it is encouraging that the fiscal discipline should not be at the expense of spending in strategic areas of the economy.
The World Bank is cautioning against letting the drive for balancing the budget and minimizing expenditure come at the expense of the nation’s most vulnerable.
This caution was given by the World Bank’s Division Director for Ghana, Sierra Leone, and Liberia, Robert Taliercio, who was speaking at the launch of the 9th Ghana Economic Update.
Robert Taliercio acknowledged the government’s “commitment to corrective measures” such as budget and public financial management reforms. The results, he said, are already visible in the first half of the 2025 fiscal year. Among some results, Ghana posted a positive primary balance of 1.1% of GDP on a commitment basis, largely achieved through expenditure rationalization.
“The new administration has shown commitment to corrective measures, including budget and public financial management reforms. Encouragingly, the first half of 2025 saw improvements, with a positive primary balance of 1.1% of GDP (on a commitment basis) achieved through expenditure rationalization,” Taliercio remarked.
However, Taliercio stressed that fiscal consolidation, while necessary for macroeconomic stability, must not overshadow strategic investments.
He said, “While the government continues to pursue macroeconomic stability through fiscal consolidation, it is important that this objective does not override the need to maintain spending in strategic areas, particularly those aimed at protecting the vulnerable.”
This recommendation poses a key policy dilemma for the government on how to tighten spending and rebuild buffers without stalling investments in health, education, social protection, and other safety nets that shield millions from economic shocks.
Analysts argue that striking this balance will be critical to sustaining public support for the consolidation program. Overly harsh cutbacks in social and development spending could slow the recovery, deepen inequalities, and erode confidence in the reform agenda.
With the government pledging to “stay the course” on stability, the World Bank’s caution is a reminder that fiscal consolidation should not override strategic investment that propels economic growth and protects the vulnerable.
