From stability to transformation: 5 tests for Ghana’s 2027 Budget

Ghana is preparing its 2027 budget with a renewed focus on economic transformation, aiming to turn stability into job creation, investment, and higher production. However, repayments due in 2027 will compete for the same public funds. The IMF has completed its review of Ghana's Extended Credit Facility, while the successor instrument, the Policy Coordination Instrument, will provide monitoring without additional financing.

The new budget must demonstrate how Ghana intends to maintain its recovery while financing its subsequent development phase.

Key points to evaluate the budget include:

1. Financing the New Economy: The Fiscal Strategy Document proposes an annual investment of 1.5% of GDP for four years, amounting to approximately US$10 billion. This financing will come from an additional 0.5% of GDP in revenue and reduced primary surplus. The budget must now outline the specific projects, their implementation, and the expected results.

2. The Lower Primary Surplus: The government plans to lower the primary surplus from 1.5% to 0.5% of GDP in 2027. While this increases expenditure capacity, it also diminishes the ability to manage debt. The budget should explain how this reduction aligns with fiscal rules, what safeguards are in place, and which spending would be reconsidered if revenue projections fall short. Independent scrutiny by the Fiscal Council would enhance confidence in these decisions.

3. Preparing for Repayments: Ghana has announced GH¢58 billion in Domestic Debt Exchange Programme bond maturities due in 2027 and an additional GH¢53 billion in 2028. The government has accumulated GH¢15.6 billion in its Sinking Fund by July 22, but its treatment has been questioned. The 2027 budget should clarify the fund's opening balance, inflows, withdrawals, and repayment plans, distinguishing between saved and borrowed funds.

4. Balancing Spending Restraint and Delivery: The government reports a first-half primary surplus of 0.9% of GDP on a commitment basis, but capital spending is 39.3% below plan, with only 38.2% of net arrears cleared. While this surplus is encouraging, the underutilization of capital funds and delayed payments of overdue bills to contractors and workers must be addressed.

The budget should clarify what was committed, what was paid, and what remains outstanding, distinguishing genuine savings from rejected claims and delivery delays.

5. Assessing Public Liabilities: The Fiscal Strategy Document already includes a Fiscal Risk Statement. The 2027 budget should build upon this by quantifying the potential taxpayer costs of key public sector liabilities, such as energy-sector obligations, guarantees, gold-purchase operations, and central bank recapitalization. The IMF's July review highlighted a waiver under the domestic gold purchase programme and reassured the commitment to recapitalize the Bank of Ghana by 2032.

These expenses need clear treatment to avoid double-counting and to provide a transparent view of potential taxpayer burdens.