World Bank warns Ghana’s fiscal surplus is being driven by spending cuts

The World Bank has expressed concern that Ghana's fiscal surplus is primarily the result of spending cuts, with capital expenditures falling short by 38% of the approved budget. Robert R. Taliercio, the World Bank Division Director for Ghana, Liberia and Sierra Leone, conveyed this message during the launch of the World Bank's Tenth Ghana Economic Update in Accra.

He emphasized that while this approach has improved Ghana's fiscal position, it raises concerns about the long-term sustainability of the country's fiscal consolidation. Taliercio stressed that Ghana's fiscal consolidation should not overly rely on reductions in capital expenditure, as such spending is vital for infrastructure development and long-term economic growth.

He pointed out that while expenditure restraint can provide short-term fiscal relief, prolonged underinvestment in capital projects could weaken the economy's productive capacity and impact growth prospects over time. The World Bank is advocating for reforms that will enable Ghana to maintain fiscal discipline while safeguarding priority investments and essential public services.

This assessment is made as Ghana continues to implement measures to restore macroeconomic stability, strengthen public finances, and reduce debt vulnerabilities. The Bank highlights the need for stronger domestic revenue mobilisation and improved expenditure management to create fiscal space for development. Taliercio's remarks underscore the challenge facing the government: sustaining the recent improvement in Ghana's fiscal position while ensuring that spending cuts do not compromise investments needed for productivity, infrastructure, competitiveness, and job creation.

The Tenth Ghana Economic Update evaluates Ghana's recent economic performance and outlines policy measures the World Bank deems necessary to sustain the recovery and foster stronger, more inclusive growth.