Government expenditure fell significantly below its programmed target in the first seven months of 2026, with total expenditure and net lending amounting to GH¢147.077 billion against a target of approximately GH¢175.932 billion, according to the Bank of Ghana’s July 2026 Monetary Policy Report. The outturn represents a shortfall of 16.4 percent, reflecting lower-than-programmed spending across nearly every major expenditure category.
The underperformance comes as the government pursues a fiscal consolidation strategy anchored on a 1.5 percent primary surplus target and a 45 percent debt ceiling, aimed at sustaining the economic stabilisation gains achieved under the recently concluded IMF Extended Credit Facility (ECF) programme.
Compensation of Employees: GH¢50.553 Billion
Compensation of employees, the single largest expenditure component, amounted to GH¢50.553 billion between January and July 2026, falling below the programmed target of GH¢52.943 billion by approximately 4.5 percent. Despite the shortfall, the outturn represented a year-on-year increase of 12.6 percent, driven primarily by the 9 percent base pay increase for public sector workers under the Single Spine Salary Structure approved for the 2026 fiscal year.
The report indicated that compensation of government employees accounted for 35.2 percent of domestic revenue mobilised during the period, underscoring the persistent pressure of the wage bill on the fiscal framework. The government has announced it will not undertake major renegotiations of conditions of service for public sector workers in 2026, focusing instead on broader reforms to the compensation system, including the planned Independent Public Emoluments Commission (IPEC).
Goods and Services: GH¢5.482 Billion
Expenditure on goods and services amounted to GH¢5.482 billion, substantially below the target of GH¢7.897 billion. However, spending under this category recorded a year-on-year growth of 63.4 percent, reflecting increased operational requirements as public institutions resumed activities following the post-pandemic recovery.
The reduction in goods and services spending stemmed from the containment of administrative spending across Ministries, Departments, and Agencies (MDAs), demonstrating the government’s continued focus on efficiency and value-for-money.
Interest Payments: GH¢25.171 Billion
Total interest payments amounted to GH¢25.171 billion during the period, compared with the budget target of GH¢34.117 billion. The outturn was 12.3 percent lower than the GH¢28.686 billion recorded in the corresponding period of 2025.
The decline was primarily attributable to lower domestic interest payments and the front-loading of some Eurobond payments at the end of 2025. The Eurobond payments made in late 2025 had originally been programmed for 2026, meaning that settling those obligations earlier shifted the timing of the expenditure away from the period under review.
The reduction in interest costs reflects the broader improvement in Ghana’s debt dynamics. Interest rates on six-month Treasury bills have fallen to about 6.5 percent, and one-year bills to 10.1 percent, from almost 30 percent at year-end 2024. The cedi’s relative stability against major trading currencies also reduced external interest costs, while the government benefited from reduced Eurobond debt servicing and concessional refinancing arrangements. Ghana’s debt-to-GDP ratio fell from 61.8 percent at the end of 2024 to 44.7 percent at the end of 2025 before edging up slightly to 45 percent by the end of June 2026.
S&P Global Ratings projects that interest payments will average a high 20 percent of government revenue over the next four years, well below the historical average of almost 48 percent recorded in 2021.
Grants to Other Government Units: GH¢30.611 Billion
Grants to other government units totalled GH¢30.611 billion, falling below the programmed target of GH¢35.866 billion. The amount also represented a year-on-year decline of 1.6 percent.
Transfers and grants to other government units form part of the government’s expenditure commitments and support the operations and activities of public institutions and other units within the government structure. The lower outturn indicates that disbursements under this category were below the amount budgeted for the first seven months of the year.
Capital Expenditure: GH¢24.228 Billion
Capital expenditure amounted to GH¢24.228 billion, equivalent to 1.5 percent of Gross Domestic Product. Although the amount represented a year-on-year increase of 157.9 percent, it remained 25 percent below the programmed target for the period.
The significant year-on-year growth reflects the government’s increased focus on infrastructure development, including the flagship “Big Push” Infrastructure Programme. In the 2026 Mid-Year Fiscal Policy Review, Finance Minister Dr. Cassiel Ato Forson disclosed that GH¢11.5 billion had been released for capital expenditure, comprising GH¢6.5 billion under the Big Push Infrastructure Programme, GH¢1.7 billion to the Road Maintenance Trust Fund, and GH¢7.1 billion to support stable power supply.
The shortfall against target was attributed to the operationalisation of the commitment authorisation policy under the Public Financial Management Act, where payments for completed projects are only made upon submission of invoices by contractors. The Institute for Fiscal Studies (IFS) has raised concerns that the reduced spending on capital projects could slow economic activity and growth, noting that capital expenditure recorded a shortfall of GH¢40.35 billion in the first half of 2026.
Other Expenditure: GH¢9.283 Billion
Other expenditure amounted to GH¢9.283 billion, representing 13.4 percent below the target for the period. This outturn compared with GH¢8.107 billion recorded in the corresponding period of 2025. The decline reflected continued progress in rationalising energy-related obligations while improving sector financing efficiency.
Broader Fiscal Context
The expenditure underperformance occurs against a backdrop of below-target revenue mobilisation. Total revenue and grants for the first half of 2026 amounted to GH¢99.388 billion, about 6.2 percent of GDP, which was 10.0 percent below the programmed target of GH¢110.412 billion. Tax revenue amounted to GH¢97.577 billion, 10.1 percent below its target, while non-tax revenue was GH¢1.590 billion, below its target by 13.0 percent.
The government has maintained a tight expenditure stance as part of its fiscal consolidation programme. In the first quarter of 2026, the primary balance recorded a surplus of 1.2 percent of GDP against a target of 0.2 percent, while the overall fiscal balance recorded a surplus of 0.1 percent of GDP against a target deficit of 1.2 percent.
The 2026 Budget targets a primary surplus of 1.5 percent of GDP on a commitment basis, with total revenue and grants of 16.8 percent of GDP and total expenditure of 18.9 percent of GDP. The government has also committed to a 45 percent debt ceiling as part of its new fiscal rules.
Revenue Challenges and Risks
The IFS has cautioned that the government’s 16.8 percent revenue-to-GDP target may be unrealistic, given that the ratio has remained below 16 percent since 2015. The institute also questioned the 4.8 percent real GDP growth target, arguing that stronger growth figures recorded in 2025 and the first quarter of 2026 should have led to an upward revision.
The Bank of Ghana has flagged that the remaining external debt restructuring negotiations could create short-term external payment pressures, potentially testing the cedi and increasing future debt servicing obligations. The central bank stressed that sustained accumulation of foreign exchange reserves will be critical to meeting upcoming external debt payments and safeguarding macroeconomic stability.
Outlook
The IMF has revised Ghana’s 2026 growth forecast upward to 5.7 percent, reflecting the country’s commitment to fiscal discipline and strong commodity export earnings, particularly from gold. The Fund also lowered its forecast for Ghana’s year-end inflation to 4.8 percent.
Finance Minister Dr. Ato Forson has expressed confidence that Ghana will exceed the IMF’s growth projection, stating during the IMF-World Bank Annual Meetings in Bangkok that the government remains committed to the fiscal credibility, discipline, and bold reforms powering Ghana’s economic turnaround.
As the government prepares for the 2027 Budget, the focus will be on balancing fiscal consolidation with the need to sustain capital spending and support economic growth. The coming months will test whether the expenditure restraint observed in the first seven months of 2026 can be maintained without undermining the government’s development objectives.
