A massive GH¢35.6 billion shortfall in government expenditure during the first half of 2026 has severely undermined the credibility of the national budget and threatens to derail critical development projects, the Institute for Fiscal Studies (IFS) has cautioned.
According to an analysis released by the IFS on Wednesday, the government had programmed total expenditures of GH¢172.54 billion for the period between January and June. However, actual spending fell significantly short of this target, leaving a yawning gap equivalent to over 20% of the half-yearly budget plan.
Speaking at a press briefing on the 2026 mid-year budget review, the IFS Acting Executive Director, Dr. Said Boakye, described the underspending as deeply concerning.
“The considerable underspending in the first half of 2026 relative to the budget plan not only undermined the budget’s credibility but, more importantly, left much to be desired in terms of growth and development,” Dr. Boakye stated.
Deviation from Financing Plan
The IFS’s critique went beyond mere spending totals, focusing sharply on the government’s financing decisions. Dr. Boakye revealed that the administration, led by Finance Minister Dr. Cassiel Ato Forson, ignored its own approved financing plan by accumulating resources in a statutory savings vehicle—widely understood to be the Ghana Stabilisation Fund (the “second fund” under the Petroleum Revenue Management Act). This accumulation, the IFS noted, was not part of the approved budget framework for the first half of the year.
“It is regrettable that the government ignored the financing plan… by accumulating resources in the second fund, something that had not been planned for,” Dr. Boakye said. This deviation, he explained, has created liquidity complications, making it difficult for the state to honour vital payments and execute capital expenditure (CAPEX) projects.
Growth vs. Austerity Tension
The warning comes at a delicate time for Ghana’s economy. While the government is navigating a strict fiscal consolidation programme backed by the International Monetary Fund (IMF)—which often rewards lower-than-expected spending as a sign of discipline—the IFS argues that this aggressive underspending is a double-edged sword. By starving key sectors of allocated funds, the government risks choking the economic recovery it is trying to engineer.
Capital expenditure, which directly funds roads, hospitals, and schools, is typically the first victim of such spending gaps. The IFS analysis suggests that the failure to utilise these funds has delayed infrastructure delivery across the country, potentially dampening the growth projections outlined in the 2026 budget.
Call for Alignment in Second Half
Looking ahead, the IFS has urged the government to implement approved expenditures fully in the second half of 2026, unless there is a clear and justifiable change in revenue performance or financing conditions.
“Going forward, the government must ensure that all financing decisions are consistent with the approved budget,” Dr. Boakye emphasised. “Public finances require predictability; ad-hoc accumulation of resources in savings funds while contractors and suppliers remain unpaid is not a sustainable fiscal strategy.”
The Institute called on the Finance Ministry to align actual spending with the legislated estimates to restore public confidence in the budget process and ensure that Ghanaians benefit from the state’s fiscal allocations.
Background on IFS
The Institute for Fiscal Studies is a leading independent think tank in Ghana, known for its rigorous analysis of public financial management and tax policy. Its mid-year assessments are closely watched by investors, development partners, and civil society organisations as a barometer of the government’s fiscal discipline.
