Here’s what to expect from the ‘New Economy’ in the 2027 Budget

The Ghanaian government has outlined a $10 billion investment plan in the upcoming 2027 budget, dubbed the "New Economy". Agriculture, manufacturing, and job creation will be at the forefront of this initiative. A Finance Ministry document, which outlines seven pillars and proposes changes to fiscal targets, provides insight into the investment plan.

The first pillar stresses macroeconomic stability, suggesting that recent economic stability can lay the groundwork for investment and job creation. The second pillar concentrates on commercial agriculture, agri-industry, and agribusiness, aiming to lessen reliance on food imports and generate jobs in farming and related sectors.

The third pillar focuses on energy sector reforms and investment, while the fourth pillar emphasizes critical minerals and value addition, reflecting the government's aspiration to maximize benefits from Ghana's natural resources through domestic processing. The remaining three pillars pertain to cotton, textiles and garments; tourism, culture and creative arts; and the establishment of a pharmaceutical manufacturing hub.

These sectors hold potential for expansion in production and employment. However, the document has yet to specify the particular projects the government plans to fund or how the proposed investment will be allocated among them. For instance, the pharmaceutical manufacturing pillar does not clarify whether the government intends to assist existing manufacturers in expanding, attract new producers, or finance shared infrastructure.

Comparable questions arise for the proposed support for textiles and mineral processing. The 2027 Budget must offer more clarity on these priorities. Nonetheless, the government has proposed a financing plan, committing 1.5% of GDP annually from 2027 to 2030, which equates to around $10 billion over the period. An additional 0.5% of GDP is expected to be generated through revenue measures, while the remaining fiscal space would be created by lowering the primary surplus target from 1.5% to 0.5% of GDP.

In essence, the government plans to generate additional revenue and create more room for productive investment while preserving a primary surplus before interest payments. Whether this will result in the anticipated jobs and increased production will depend on what the money finances and how the projects are executed.