Poor budget execution could hurt economic growth – IFS warns govt

Ghana's economic growth could be jeopardized by the poor execution of its 2026 budget, according to a stark warning from the Institute for Fiscal Studies (IFS). The IFS highlights that continued government restrictions on spending for crucial capital projects and the settlement of outstanding arrears are particularly concerning. The institute's analysis, presented in Policy Brief No. 26, reviewed the government's mid-year budget performance for 2026. It revealed that total revenue and grants collected in the first half of the year amounted to GH¢124.78 billion, falling short of the budgeted GH¢126.14 billion by GH¢1.37 billion, or 1.1 percent. Tax revenue also missed its target, reaching GH¢103.77 billion against a projected GH¢105.26 billion. Non-tax revenue performed even worse, collecting GH¢12.27 billion against a target of GH¢14.90 billion, largely due to lower-than-expected dividends, interest, and oil profits. Conversely, other revenue sources, including ESLA proceeds, exceeded expectations. On the expenditure side, total government spending, encompassing arrears and discrepancies, was GH¢136.94 billion, significantly under the budgeted GH¢172.54 billion by GH¢35.60 billion, a shortfall of 20.6 percent. The most substantial shortfalls were observed in arrears clearance, with only 38.2 percent of the budgeted GH¢13.98 billion disbursed, and capital expenditure, which saw only 39.3 percent of its GH¢36.56 billion target met. Interest payments and grants to other government units also fell below their targets, as did compensation of employees. This significant underspending resulted in a much smaller fiscal deficit than budgeted.