By Rachel GYABAAH, Development Practitioner
Introduction and Background
Geopolitics and the intersections of interests from developed economies have a way of shaping other economies. Possibly the reality of the adage on “if two (2) elephants fight, it’s the ground that suffer” appears to be the stuck reality at the center of the IMF-World Bank spring meetings. To wit, whatever economic tensions and conflicting interests is at play among giant global economies, somewhat has a way of affecting other developing economies.
On the wheels of the recent spring meeting held in April 2026, the IMF Managing Director – Kristalina Georgieva, expressed worry that global growth had declined from 3.4% in 2025 to 3.1% in 2026. She was pessimistic and sounded the caution that in the worst-case scenario, global growth could drop to as low as 2%. What could this really mean for African economies?
She was emphatic about the asymmetric burden this decline in global growth could have on the global economy. She indicated that countries that would experience the most negative impacts were those that import energy and have limited policy space. Describing the scope of vulnerabilityy, she indicated that that the majority of sub-Saharan African countries are most likely to be equally affect by the decline in global growth index.”
On the issue of debt, she mentionedglobal public debt was on a trajectory to breach 100% of GDP by 2029, a disturbing trend to be ever witnessed since 1948. Amidst all these looming trends, Madam Kristalina’s recommendation to developing economies was to build robust, innovative and strong institutions as well as creating sound economic buffers with the tendency to withstand any economic and global change or threats.
At the very core of such economic interventions is prudent and sustainable Public Financial Management (PFM). In the case of Ghana, such global trends should not be a distant caution neither a mere recommendation but rather it should be the operational reality of our governance structure and development.
A Budget Under Pressure
Central to any PFM architecture is the national budget which basically gives the roadmap per projected income and expenditures as well as the economic policies to drive the desired change. Ghana’s 2026 Budget, presented under the theme “Resetting for Growth, Jobs, and Economic Transformation,” reflects a country attempting to stabilise its ailing economy while navigating genuine fiscal pressure.
Debt restructuring under the just ended IMF-supported programme created economic measures to navigate these fiscal pressures. According to the Bank of Ghana Summary of Economic and Financial Data Report (March 2026), Ghana’s public debt declined from 61.8% of GDP in December 2024 to approximately 45.3% of GDP by December 2025, driven by a combination of debt restructuring, cedi appreciation and fiscal consolidation of the rebound of the Ghanaian economy.
Although the improvement is significant, it does not erase the deeper structural pressures within the fiscal system. Debt service obligations continue to absorb resources that could otherwise support productive investment and long-term development.
The composition of expenditure tells the real story. Compensation of government employees is projected to reach GH¢90.8 billion in 2026, representing 5.7% of GDP, while interest payments alone are expected to consume GH¢57.7 billion, or 3.6% of GDP. Together, these two expenditure lines account for a substantial share of public spending, leaving increasingly limited fiscal space for transformative investment in agriculture, infrastructure, industrialisation, health, education, and job creation as well as other essential sectors of Ghana’s economy.
Even in politically prioritised sectors, the economic and fiscal constraints are evident. For instance, Ghana’s education spending stands at approximately 2.91% of GDP, below internationally recommended benchmarks of 4-6% of GDP. Thus, such funding deficits reinforces persistent shortfalls in educational infrastructure, teaching and learning materials among others
At the same time, the 2026 Budget does signal areas of genuine ambition. Financing for women-led enterprises through the proposed Women’s Development Bank has increased significantly from the GH¢51.3 million seed allocation made in the 2025 Budget to over GH¢400 million in 2026. On the surface, this reflects an important recognition that women’s economic empowerment cannot remain rhetorical.
Yet the harder question is whether such allocations are embedded within a coherent, results-driven fiscal strategy, or whether they remain isolated commitments within a public financial system that has historically struggled to consistently translate allocations into measurable development outcomes. One important lesson Ghana should have learnt by now is that, in times of fiscal constraint, fragmentation does not just reduce efficiency. It destroys it. In essence, when the fiscal space appears tight, discipline is indeed not optional since that result in weakness of the PFM structure.
When Weak Systems Become Dangerous
Public Financial Management (PFM)is, at its core, the systems, laws, and practices that govern how public funds is raised, spent, and accounted for. This may sound like a technocratic concern but it’s not. A robust PFM mechanism is the defining difference between a budget that delivers sustainable services and one that simply spends money.
A nationwide arrears audit initiated in the 2025 Mid-Year Fiscal Policy Review exposed the scale of Ghana’s public financial management gaps. The Ghana Audit Service, working in partnership with EY and PwC, was tasked to audit and validate GH¢68.7 billion in arrears and payables submitted by Ministries, Departments, and Agencies (MDAs). Preliminary findings at that stage showed that while GH¢28.3 billion had been validated for payment, GH¢3.6 billion was rejected due to errors, duplication, and non-compliance with PFM and procurement rules, while an additional GH¢562.6 million lacked adequate supporting documentation.
Far from being an isolated accounting issue, the audit revealed the cummulative effect of years of weak commitment to controls, expenditure indiscipline, and the routine regularisation of overspending after the fact. The consequences of weak expenditure discipline were not merely technical; they were felt across the economy. In 2025, the Ministry of Roads and Highways alone carried over GH¢21 billion in unpaid contractor certificates dating back to 2018, within a road sector commitment stock exceeding GH¢103 billion. However, at such high estimated levels no single budget cycle could realistically absorb these estimations. It simply reflects, the budget may have made related promises and commitments that the fiscal system could not either fund or sustain.
On the other hand, the Ghana School Feeding Programme terminated caterers’ contracts nationwide amid unsettled arrears and on-going programme restructuring, disrupting meals for nearly four million children. Weak public financial management does not merely waste money. Rather, it turns fiscal stress into fiscal instability and in return widens the poverty and inequality gaps
The Amendment That Must Be More Than Words
It is against these backdrop that the Public Financial Management (Amendment) Act, 2025 (Act 1136) must be understood not as a routine legislative housekeeping, but as a corrective response to persistent, costly structural failures. The amendments seek to tighten financial commitment controls, strengthens enforcement of fiscal laws, procedures and regulations, as well as reinforce transparency and oversight mechanisms.
The uncomfortable truth is that Ghana’s challenge has never been the absence of frameworks or laws but rather the effective and efficient implementation of the same. Although the Public Financial Management Act, 2016 (Act 921) have long existed and duly established fiscal responsibility principles, borrowing ceilings, and reporting requirements, rigorous implementation has been a lingering challenge. Programme-Based Budgeting was introduced to link public spending to measurable outcomes and improve accountability in resource allocation. However, the missing link over the years is the absence of consistent and rigorous enforcement of PFM procedures, laws and regulations.
This missing has equally resulted in the hefty irregularities, corrupt practices and wastage within Ghana’s PFM ecosystem. As evident in the recent arrears audit, weak commitment controls and years of normalizing overspending have created a culture where non-compliance carries limited consequence, even when it results in questionable claims, payments and unpaid obligations worth billions
Thus, going forward, the litmus test per the success of Ghana’s Public Financial Management (Amendment) Act, 2025 (Act 1136) will not necessarily be its architecture but rather it would be as towhether enforcement will subsequently be consistent, transparent, and without political exceptions as well as political interferences. Will officialdom and citizens alike be willing to pay the price?
PFM as a Strategic and Prudent Tool
Global experience shows that the most transformative fiscal systems do not merely control spending, but they shape it. Rwanda offers the most instructive example on the African continent. Over the years, Rwanda have embarked on a drastic systematic overhaul of its PFM framework from bottom up. Successive Public Expenditure and Financial Accountability (PEFA) assessments have duly reckoned Rwanda’s progress over the years.
Today, owing to Rwanda’s sustained PFM efforts and reforms it has gained global reputation for fiscal discipline and effective public services. It’s noteworthy that per the 2022 PEFA assessment, Rwanda incorporated both gender and climate responsive PFM evaluations and equally mainstreamed these priorities into the core framework of resource allocation. The climate dimension of PFM is particularly urgent for Ghana to replicate.
Indonesia offers a parallel lesson. Post-Asian financial crisis reforms improved its fiscal position sufficiently to enable countercyclical responses beyond the 2008 and 2013 global shocks. Although their fiscal discipline and reforms were economically stressful and intense, yet the payoff was generational. The Rwandan and Indonesian experience depict that the window for PFM reforms is most effectivelyy used beyond an economic crisis, but must Ghana equally wait for an economic crisis before being stringent with its PFM mechanisms?
Ghana have had its fair share of economic woes for which the valuable lessons from the above countries as well as other best practices across the globe, offers Ghana a great learning curve such that we cannot afford to get it wrong going forward. In Ghana’s prevailing circumstance, significant portions of public expenditure remain weakly linked to measurable outcomes whereas Programme-Based Budgeting also do exist, however, evaluation of such interventions are inconsistent and related findings rarely feedback into budget allocation decisions.
Furthermore, cross-cutting priorities like gender equity, climate resilience and local economic transformation although they do appear in budget statements, do not translate into reality because such commitments are not subsequently embedded in the core logic of resource allocation.
Ghana At Crossroads
Amidst global economic trends coupled with Ghana’s rebounding economy, are we willing to pay the price? Are we eager to sustain the economic gains made so far? This, ultimately, is what an effective and efficient public financial management is all about, not merely systems neither law but choices. Thus, making sound and viable choices that will ensure economic sustainability.
During the recent IMF-World Bank spring Meetings, Madam Georgieva’s message was consistent and unsparing. She emphasized that countries that had over the years built and sustained strong fiscal policies as well as established robust and innovative institutions were weathering the global economic turbulence. However, other countries that have not attained this feat were dangerously exposed. The 2025 PFM amendment gives Ghana a great scope to become an exceptional case study.
Albeit be as it may that laws do not implement themselves; Ghana will equally require the needed political will and sustained commitment to optimally execute and implement the related PFM amendments. Officialdom should be willing to apply sanctions where fiscal rules are breached regardless of who ever is involved. In situations where this ideal is lacking, citizens and the media should be eager to demand for accountability from political and institutional leadership. Furthermore, fiscal discipline must prevail at all levels of public service owing to the dire consequences we may suffer should we fail at same. This will as well require the oversight of Parliament as well as the active participation of civil society and citizens.
Conclusion
With Ghana’s rebounding economy coupled with its recent exit from an IMF programme offers it the leverage to walk the talk per its PFM measures particularly in terms of a sustainable safety nest that realistically translates macroeconomic gains into microeconomic realities that will be relevant to quality of lives of Ghanaians and investors alike. To this end, fiscal discipline is no longer optional and must not be sacrificed for any other competing interest. Ghana must ensure and sustain fiscal discipline going forward. This will require Ghana moving away from emergency responses funding and incorporating sound fiscal buffers and resilience into its PFM ecosystem.
Sources:
https://mofep.gov.gh/sites/default/files/budget-statements/2025-Mid-Year-Fiscal-Policy-Review.pdf
https://www.pefa.org/node/5061
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