Renowned economist and former Director of the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana, Professor Peter Quartey, has endorsed the government’s spending performance for the first seven months of 2025, describing a 5% deviation as acceptable within the bounds of fiscal prudence.
This follows reports indicating that government expenditure during the period remained below target — a development that reflects tighter fiscal discipline and improved expenditure control.
Speaking to Citi News, Professor Quartey noted that while maintaining fiscal discipline is essential, excessive cuts in government spending could slow economic growth.
“If we are deviating 14% from a target, that certainly is not the best. A 5% deviation is fine, but anything above that I think is significant. And if you don’t spend, you are constraining growth. If your government is not spending, it is restricting economic activity, and you are not propelling the economy to be able to engage more people, employ more people, and lead to further growth.
“So, since we want to remain committed to fiscal prudence, we should also not be so fixated on always cutting down spending. Some level of spending is good, and that’s why in some countries, you see massive infrastructure development, you see government spending. Not spending outside limits, but spending within limits. So, my point is, yes, it’s good to ensure fiscal prudence, but also some level of spending is necessary to stimulate growth,” he said.
Professor Quartey further cautioned that reduced spending does not automatically translate into efficiency, warning that it could lead to arrears or delays in funding key sectors such as infrastructure and local governance institutions.
“Reduction in spending doesn’t really translate into efficiency. Perhaps there are accrued arrears, and perhaps there are institutions that need funding but are not receiving it. And maybe MMDAs are not receiving what is necessary.
“We see our street lights; most of them are not working. There are a lot of things that are not happening, and therefore, we cannot celebrate a reduction in expenditure when there are obvious needs, certain activities to be funded.
“I think we should be prudent, but also spend where necessary. Our street lights, our streets are dark, our rivers are being polluted. Quite a few things are not happening, so let’s spend, but spend wisely,” he added.
According to the Bank of Ghana’s September 2025 Monetary Policy Report, total government spending stood at GH¢131.1 billion, equivalent to 9.4% of GDP, compared to a target of GH¢152.6 billion or 10.9% of GDP.
The outturn represents a 14.1% shortfall relative to the target but marks a 9.3% year-on-year increase in expenditure.