The Institute of Fiscal Studies (IFS) has questioned the credibility of Ghana’s 2026 Budget over GH¢15.6 billion accumulated in the Sinking Fund.
The Institute said the amount was not included in the government’s initial financing plan and contributed to a GH¢34.45 billion shortfall in domestic financing in the first half of 2026.
Dr Said Boakye, Executive Director of the IFS, said the development raised concerns about budget planning and execution as the government accumulated funds in the Sinking Fund while underspending on key budget items.
“While starving the budget of domestic financing, the government was at the same time borrowing money to keep in the Sinking Fund,” he said.
The IFS said domestic financing fell short of the GH¢51.28 billion target for the first half of the year by 67.2 per cent.
It said the Minister of Finance had disclosed that GH¢15.6 billion had been accumulated in the Sinking Fund by July 22, 2026, although the amount was not captured in the initial 2026 Budget.
The Institute said this raised questions about whether the government had adequately assessed its financing requirements before presenting the Budget to Parliament.
“Was the government not aware while preparing the 2026 budget and setting its financing targets that it would raise such a large amount of money for the Sinking Fund?” Dr Boakye asked.
“Or was it aware but chose not to capture this in the budget that it presented to Parliament?” he added.
The IFS said either scenario pointed to weaknesses in budget planning.
“Whatever the case may be, it shows poor planning on the part of the government,” the IFS Executive Director said.
The Institute said the financing shortfall was reflected in lower-than-programmed government expenditure in the first half of the year.
It said the government had programmed GH¢172.54 billion in expenditure, including arrears payments, for the period, but actual expenditure fell short by GH¢35.60 billion, representing 20.6 per cent.
Capital expenditure was GH¢14.38 billion below target, equivalent to 39.3 per cent of the budgeted amount, while arrears payments fell short by GH¢8.64 billion, representing 61.8 per cent.
The IFS said weaker revenue mobilisation and lower-than-expected foreign borrowing could not fully explain the expenditure shortfall.
It said the combined shortfall in total revenue and grants and foreign borrowing was GH¢8.39 billion, less than one-fourth of the overall expenditure gap.
“The huge shortfall in spending is mostly attributable to a large shortfall in domestic budget financing,” Dr Boakye noted.
The Institute warned that the spending restriction could weigh on economic growth, given the contribution of government expenditure to Gross Domestic Product (GDP).
It said non-oil real GDP growth was 6.3 per cent in the first half of 2026, but had slowed from rates recorded in the preceding four quarters.
“Clearly, the sharp decline in government spending is at play here,” the IFS said.
The Institute cautioned that continued significant restrictions on government expenditure could lead to a further slowdown in non-oil real GDP growth.
It urged the government to improve budget execution by aligning expenditure and financing decisions with the approved Budget.
The IFS said expenditure should be implemented as budgeted, except where genuine revenue and financing constraints made that impossible.
It also urged the government to ensure that financing decisions were consistent with the approved Budget, warning that significant deviations between budget targets and actual execution could undermine budget credibility and affect economic growth and development.
Source: GNA
