Ghana’s government spending in 2025 plunged well below proje
Fiscal consolidation bites as 2025 spending slips by 24%
Government expenditure in 2025 fell significantly short of projections, underscoring an intensified fiscal consolidation drive anchored on strict spending controls and curtailed capital investment.
The January 2026 Monetary Policy Report published by the Bank of Ghana showed that total outlays for the year amounted to GH¢194.36 billion, representing a 24 per cent shortfall relative to the programmed estimate of GH¢250.311 billion.
Expenditure on Compensation of Employees, covering salaries and wages, pensions and gratuities, as well as other wage-related costs, reached GH¢71.274 billion, slightly exceeding the budgeted GH¢70.037 billion.
In terms of revenue allocation, compensation consumed 38.2 per cent of domestic revenue generated during the period, highlighting ongoing structural pressures within the expenditure framework.
Tighter operational spending
Spending on Goods and Services amounted to GH¢5.271 billion, falling 16.8 per cent short of the projected GH¢6.335 billion.
The lower outturn suggests tighter controls on discretionary operational expenses.
It was also markedly below the GH¢38.438 billion recorded over the same period in 2024, reflecting a sharp year-on-year contraction of 86.3 per cent.
Interest costs totalled GH¢46.211 billion, below the programmed GH¢57.869 billion for the review period.
Nonetheless, the figure was 5.8 per cent higher than the GH¢43.682 billion recorded in the corresponding period of 2024.
The moderation relative to target was largely attributed to declining domestic interest rates and the strengthening of the cedi, which reduced the local currency burden of external debt servicing.
Transfers to Other Government Units comprising allocations to the National Health Fund, GETFund, Road Fund, Energy Fund, District Assemblies Common Fund (DACF), retention of Internally Generated Funds, transfers to GNPC, the Ghana Infrastructure Fund and other earmarked accounts amounted to GH¢50.805 billion.
This was 3.7 per cent above the budgeted GH¢48.978 billion and represented a year-on-year growth of 24.2 per cent.
Capital spending for the period stood at GH¢12.978 billion, equivalent to 0.9 per cent of GDP, significantly below the programmed GH¢31.401 billion, which represented 2.2 per cent of GDP.
The outcome was 58.7 per cent under target and reflected a 50.6 per cent decline compared to the 2024 outturn, pointing to subdued public investment activity during the year.
Other expenditure over the eleven-month period totalled GH¢14.499 billion, undershooting the target of GH¢35.689 billion by 59.4 per cent.
This compares with GH¢24.766 billion recorded in the same period in 2024.
Taken together, the fiscal outturn underscores a consolidation drive centred on expenditure containment, with significant reductions in capital and non-essential spending helping to offset rigid wage and statutory obligations.
ctions, driven by aggressive fiscal tightening through strict controls and slashed capital investments.
According to the Bank of Ghana’s January 2026 Monetary Policy Report, total outlays hit GH¢194.36 billion 24% short of the GH¢250.311 billion target.
Employee Compensation Slightly Over Budget
Salaries, wages, pensions, gratuities, and related costs reached GH¢71.274 billion, edging past the GH¢70.037 billion projection. This category ate up 38.2% of domestic revenue, exposing persistent structural strains.
Tighter Controls on Operations
Goods and Services spending fell to GH¢5.271 billion, missing the GH¢6.335 billion target by 16.8%. This signals curbs on discretionary expenses and marks an 86.3% drop from GH¢38.438 billion in 2024.
Interest Payments Moderated
Interest costs totaled GH¢46.211 billion, below the GH¢57.869 billion forecast but up 5.8% from GH¢43.682 billion in 2024. Lower domestic rates and a stronger cedi eased the external debt burden.
Transfers Rise Modestly
Allocations to funds like the National Health Fund, GETFund, Road Fund, Energy Fund, DACF, IGF retention, GNPC, and the Ghana Infrastructure Fund came to GH¢50.805 billion 3.7% above the GH¢48.978 billion budget and up 24.2% year-on-year.
Capital Spending Severely Cut
Capital outlays dropped to GH¢12.978 billion (0.9% of GDP), 58.7% below the GH¢31.401 billion target (2.2% of GDP) and down 50.6% from 2024 levels, signaling subdued public investment.
Other Expenses Slashed
Miscellaneous spending totaled GH¢14.499 billion, undershooting the GH¢35.689 billion target by 59.4% and falling from GH¢24.766 billion in 2024.
Overall, these results highlight a deliberate consolidation strategy, with deep cuts to capital and non-essential areas offsetting inflexible wage and statutory payments.
Story by: Mercy Addai Turkson#ahotorfmonline.com