Ghana's government underspent its capital expenditure budget by 40 percent in the first quarter of 2026. This significant shortfall raises concerns about the timely delivery of major development projects across the country.
Yaw Appiah Lartey, a partner at Deloitte, highlighted this issue on July 25, 2026. He warned that this substantial underspend could negatively affect the implementation of crucial infrastructure initiatives. The government had allocated considerable funds for capital projects but failed to meet its spending targets during the review period.
This capital expenditure underspend occurs despite some positive fiscal outcomes. The government achieved savings in compensation and interest payments. These savings were partly due to improved payroll management and efforts to remove 'ghost names' from the payroll system. Such measures are vital for Ghana's broader economic stability and fiscal discipline, especially as the nation navigates its economic recovery.
Mr. Lartey noted that the government saved approximately GHS 3.4 billion through payroll cleanup. Additionally, about GHS 6.9 billion was saved on interest payments. These savings resulted from lower policy rates and more favorable borrowing conditions. "Government is borrowing at a much cheaper rate than it used to in the past, and that presents a positive development," Mr. Lartey stated.
However, the primary challenge remains the capital expenditure, with its more than 40 percent underspend. Mr. Lartey questioned the progress of the ambitious capital program announced last year. Delays in executing planned projects could severely impact infrastructure delivery, including vital roads and other key development initiatives.
The government's new approach of securing funding arrangements before starting major projects is a positive step. This strategy aims to prevent projects from being abandoned midway due to financing challenges. Historically, many capital projects have suffered because construction began without guaranteed funding, leading to delays and increased costs.
Mr. Lartey emphasized, "Starting projects with funding secured means we do not have situations where projects begin and later get stuck because there is no money to continue." This shift is crucial for ensuring project continuity and efficient use of public funds.
Despite the expenditure controls, revenue mobilization remains a significant challenge for the government. Improving revenue collection is critical to finance ongoing programs and deliver the infrastructure citizens expect. The government's overall program expenditure was projected at GHS 158 billion for the first quarter, but actual expenditure showed an underspend of about 20 percent.
The implications of this capital expenditure underspend are far-reaching. It could slow down economic growth by delaying essential infrastructure development. Decision-makers will need to address the bottlenecks in project execution and enhance revenue collection strategies. Markets will closely watch how the government balances fiscal prudence with the need for developmental spending in the coming quarters.