Ghana closed 2025 with a tighter-than-expected fiscal deficit but at a significant cost to public investment, as a line-by-line analysis of the government’s budget execution reveals a 59 percent shortfall in capital spending that raises questions about the pace of infrastructure-led growth entering 2026.
The analysis, conducted by policy analyst Alfred Appiah, draws on data from the Bank of Ghana’s (BoG) January 2026 Monetary Policy Report and Ministry of Finance outturns to assess how the government’s planned spending compared with actual delivery across each major expenditure category.
On the revenue side, tax collection reached 97 percent of its target, a near-target performance that Appiah described as broadly resilient but noted that even a three percent shortfall translates into meaningful gaps in a constrained fiscal environment. Grants underperformed sharply, meeting only 68 percent of their projected inflow, reinforcing Ghana’s well-documented vulnerability to unpredictable external financing. Social contributions also missed their target, reaching 73 percent of the projected figure. Offsetting these shortfalls, non-tax revenue exceeded its target at 105 percent, while other revenue streams outperformed at 108 percent. Total revenue and grants landed at 98 percent of the annual projection.
The expenditure picture told a more complex story. Total government spending reached only 87 percent of the budgeted amount, a figure that contributed to the deficit coming in below target but also masked significant structural problems beneath the surface.
Capital expenditure was the starkest outlier. Official Bank of Ghana data confirmed that capital spending for the year reached GHS12.978 billion, equivalent to 0.9 percent of Gross Domestic Product (GDP), against a programmed GHS31.401 billion representing 2.2 percent of GDP. The outturn was 58.7 percent below target and reflected a 50.6 percent decline compared to the 2024 outturn, a development that points to deeply subdued public investment at a time when the government has positioned infrastructure as a central pillar of its economic reset agenda.
Other expenditure undershot its target by 59.4 percent, while interest payments on public debt were executed at 83 percent of the planned level, reflecting the weight of debt servicing obligations even as debt restructuring continued to reshape the country’s liability profile.
On the upside, spending on goods and services reached 91 percent of target, social benefits were executed at 90 percent, and transfers to other government units exceeded their budget by 3.7 percent. However, compensation of employees, covering wages, pensions, and gratuities, overran its allocation by 1.8 percent, reaching GHS71.274 billion against a budgeted GHS70.037 billion. Wage overruns and statutory transfers continue to display upward rigidity, limiting the government’s room to redirect resources within the budget.
The overall fiscal deficit on a cash basis came in at approximately 3.1 percent of GDP, below the 3.8 percent target set at the start of the year, a consolidation outcome that Appiah attributed primarily to expenditure compression rather than revenue outperformance.
“Overall, the picture shows significant fiscal restraint. Going forward, we will see how this evolves as the government begins to expand spending on key flagship initiatives,” Appiah said.
The 2026 budget has sharply reversed the capital spending constraint, allocating 66.4 percent of incremental spending to infrastructure under the government’s multi-year investment programme. Whether execution will match intention remains the test ahead.
