The Institute for Fiscal Studies (IFS) is challenging what the government terms as deliberate, prudent fiscal management in the 2025 Mid-Year Budget review.
The institute says the government cannot claim credit for Ghana’s lower-than-expected expenditure and fiscal deficit for the first half of 2025.
The public policy think tank says the outturns were less about government prudence and more about harsh economic realities that left little room for choice. This position of the IFS was contained in its latest analysis of the 2025 Mid-Year Budget Review cited by The High Street Journal.
For IFS, at least two reasons accounted for what seemed like prudent fiscal management, and none of them came about as a result of any effort of the government.
Not Discipline, But Difficulties
IFS argues that the reduced spending and deficit should not be mistaken as the result of deliberate fiscal discipline.
Instead, they were “largely imposed” by tough fiscal conditions that constrained the government’s ability to spend and borrow. The institute observes that both domestic and foreign financing avenues were not favourable to the government as it wasn’t able to raise its financing needs.
“The government planned to raise net budget financing of GH₵32.96 billion, but was able to secure only GH₵15.12 billion, representing only 45.9% of what had been programmed. In fact, the foreign borrowing component of net foreign financing fell short by as much as 63.8%, from the budgeted amount of GH₵19.13 billion to an actual amount of only GH₵6.93 billion,” the report noted.
It continued that, “the net domestic financing fell short by GH₵5.79 billion or 30.7% from the programmed amount of GH₵18.87 billion to GH₵13.08 billion. This is despite the government drawing down GH₵4.58 billion from its balances at the Bank of Ghana, against a programmed withdrawal of zero.”
Weak Revenue Performance
IFS also maintains that the situation of tight spending and favourable deficit was also partly caused by weak revenue performance in the first half of 2025.
Contrary to the Finance Minister’s optimistic remarks on revenue collection, IFS says numbers tell a different story. Domestic revenue fell short of target by GH₵2.9 billion (2.9%), while foreign grants underperformed by GH₵338.7 million (31.7%).
In total, revenue and grants missed their budgeted target by GH₵3.24 billion in the first half of the year. This shortfall left the government with less fiscal room, forcing expenditure down, not by design, but by necessity.
The Bigger Picture
For IFS, these realities make it clear that Ghana’s reduced fiscal deficit is not the product of tighter controls or intentional belt-tightening.
Instead, it reflects the government’s inability to raise enough revenue or borrow as planned in a difficult financing climate.
In simple terms, Ghana’s books may look leaner, but not because of dieting, it’s because the kitchen was half empty.
