Dr. Gideon Boako, Deputy Ranking Member on Parliament's Finance Committee, has challenged the government's assertions of a strong economy. He states that an economy cannot be healthy if the government borrows to fund recurrent expenditures like public sector salaries and the Free Senior High School (Free SHS) program.
This reliance on borrowing for basic obligations raises serious questions about the sustainability of Ghana's public finances. It contradicts official claims of macroeconomic improvement, suggesting deeper fiscal issues. A truly robust economy should generate enough domestic revenue to finance its essential programs without needing external loans for day-to-day operations.
Ghana's public debt has been a persistent concern, with the debt-to-GDP ratio remaining elevated in recent years. The government's continued need to borrow for consumption, rather than investment, exacerbates this challenge. This trend indicates a structural imbalance between government revenue and expenditure, a situation that has historically led to fiscal instability in many developing economies.
Speaking during a discussion on the 2026 Mid-Year Budget Review on Peace FM, Dr. Boako emphasized the inconsistency between government actions and its economic recovery claims. He stated, “An economy described as doing well should not be borrowing to pay salaries and fund Free SHS as we are seeing under this government.” This highlights a critical disconnect between official rhetoric and the practical realities of fiscal management.
The implications of this borrowing strategy are significant for Ghana's economic future. Continued reliance on debt for recurrent spending can crowd out private sector investment, increase debt servicing costs, and potentially lead to higher inflation. Investors and international financial institutions will closely monitor these fiscal indicators, which could influence Ghana's credit ratings and access to future financing.
Policymakers face the urgent task of enhancing domestic revenue mobilization and rationalizing public expenditure. This includes reviewing the efficiency of programs like Free SHS and exploring alternative funding mechanisms. Failure to address these fundamental fiscal weaknesses could undermine long-term economic stability and hinder Ghana's development trajectory.
The government's ability to transition from borrowing for consumption to financing through sustainable domestic revenue will be a key determinant of its economic credibility. This shift is crucial for building a resilient economy capable of supporting its citizens without accumulating unsustainable debt burdens. The upcoming budget statements and economic policy reviews will provide further insight into how the government plans to tackle these challenges.