Economists and analysts in the country and beyond have celebrated the much-touted fiscal discipline following the 2025 Mid-Year Review, but the Institute of Fiscal Studies (IFS) is exposing a serious irony of the situation.
The IFS says a critical review of the first half of the year tells a more sobering story despite the accolades of fiscal prudence.
Far from prudence, the lower deficit masks a sharp derailment of key spending items, leaving Ghana’s much-touted Big Push agenda and other critical initiatives gasping for air.
Finance Minister, Dr. Cassiel Ato Forson, in the presentation of the 2025 Mid-Year Review, proudly announced how the government has been able to control expenditure. Keeping the reins on expenditure, the finance revealed resulted in a lower than projected expenditure and deficit.
However, in their analysis of the Mid-Year review, IFS argued that beneath the surface of the so-called fiscal prudence is a hidden situation where some expenditure items outlined for execution in the 2025 budget are struggling for survival.
With the conversation on the fiscal management taking the center stage, many Ghanaians, economists, and analysts have not averted their minds to the troubling situation. A review shared with The High Street Journal shed more light on the budget items bearing the brunt of the fiscal prudence.
Capital Expenditure Crippled
At the heart of the disappointment is capital expenditure, which fell short by GH₵10.95 billion, or 60.6%, from the programmed GH₵18.06 billion to just GH₵7.11 billion.
IFS indicates that both foreign- and locally-financed projects were hit hard.
For a government that has trumpeted its Big Push infrastructure agenda, the cutback is nothing short of devastating. IFS argues that the agenda has been rendered “inconsequential,” given that public investment as a share of revenue was already too small to begin with.
For citizens, this means delayed roads, stalled schools, and shelved hospital projects, far removed from the glossy budget promises.
“Most notably, the execution of the capital budget suffered disappointingly, as capital expenditure fell short by as much as GH₵10.95 billion or 60.6% from the programmed amount of GH₵18.06 billion to a mere GH₵7.11 billion as the actual amount,” IFS noted.
Arrears Payments Fall Behind
The government’s arrears payments also took a heavy blow, IFS says. Against a target of GH₵7.50 billion, only GH₵4.78 billion was paid, a shortfall of 36.2%.
This underpayment has ripple effects across the economy. Contractors remain cash-strapped, stalling ongoing projects and worsening liquidity problems. Banks, already struggling with high levels of nonperforming loans, see little relief.
Ironically, this comes at a time when the government claims to have inherited a staggering GH₵67.5 billion in arrears, making timely payments all the more urgent.
“Critical expenditure that suffered from the funding difficulties was arrears payment, which was 36.2% below target, with GH₵4.78 billion paid against a programmed amount of GH₵7.50 billion,” the review added.
GoldBod Not Spared
Perhaps the clearest symbol of Ghana’s strained finances is the government’s flagship initiative, the Ghana Gold Board (GoldBod). According to the IFS, the board was slated to receive GH₵4.55 billion in seed funding during the first half of 2025.
Ironically, despite the revenues GoldBod is touted to have brought into the country through gold export, it received nothing in terms of the promised seed money
For a project that the government itself had hailed as a cornerstone of economic transformation, its neglect highlights the depth of the fiscal squeeze.
“GoldBod, which had been programmed to receive GH₵4.55 billion in the first half of the year as seed money for its operations, actually received no funding from the government during the period,” IFS noted.
The Irony
IFS’s analysis drives home an uncomfortable, ironic situation that, while the government touts fiscal discipline, what is unfolding is not prudent belt-tightening but forced austerity.
For the think tank, the celebrated lower spending wasn’t a matter of choice; it was the outcome of weak revenues and limited financing options.
The implication is clear. Behind the celebratory speeches of sound fiscal management lies a troubling reality: essential development spending is being sacrificed, contractors remain unpaid, and flagship initiatives are starved of cash.
As many analysts and economists say, fiscal discipline is only meaningful when achieved through deliberate choices, not when imposed by fiscal distress that leaves budgeted items unfulfilled.
