Ghana’s New Economy Faces Three Unanswered Questions Ahead of 2027 Budget, Economist Warns

As Finance Minister Cassiel Ato Forson prepares to present the 2027 Budget on November 12, economist Dennis Nsafoah asks whether Ghana’s $10 billion New Economy programme is genuinely new spending, how a larger deficit will be financed without crowding out private credit, and whether it can coexist with the government’s aggressive reserve accumulation targets.

On November 12, 2026, Ghana’s Minister for Finance, Dr Cassiel Ato Forson, is expected to present the 2027 Budget, which the government is promoting as the beginning of a New Economy. At the centre of this agenda is a proposed US$10 billion investment programme over four years, targeting infrastructure, agriculture, manufacturing and other productive sectors.

The shift from macroeconomic stabilisation toward investment-led growth is a welcome policy direction. Having made significant progress in restoring macroeconomic stability, Ghana now has an opportunity to build on these gains by addressing structural constraints to economic growth, expanding productive capacity, creating sustainable employment and improving household incomes.

However, the proposed New Economy raises three important economic policy questions: How much of the announced investment is genuinely new? How will the government finance the larger fiscal deficit? And how will the investment programme be reconciled with the government’s ambitious foreign reserve accumulation strategy?

Question One: How Much Is Genuinely New?

The government intends to reduce its primary surplus target from 1.5% of GDP to 0.5% in 2027, creating additional fiscal space equivalent to approximately 1% of GDP. Preliminary announcements also suggest additional revenue mobilisation of 0.5% of GDP, potentially increasing total fiscal space by 1.5 percentage points.

However, the 2026 Budget had already projected capital expenditure of 4.6% of GDP for 2027 — a level arguably inadequate for an economy facing significant infrastructure deficits and an urgent need for productive investment. The critical question is therefore how much additional investment the New Economy will deliver beyond this already modest allocation.

The indicative 2027 fiscal projections place nominal GDP at GH¢1,806.25 billion, total revenue and grants at GH¢310.75 billion, and total expenditure on a commitment basis at GH¢341.94 billion. Direct capital expenditure is projected at GH¢61.32 billion, rising to GH¢82.83 billion when capital transfers are included — equivalent to the 4.6% of GDP figure.

With the announcement of the New Economy, it is important to establish whether the proposed investment programme will increase this allocation or largely finance projects already included in the government’s existing expenditure plans.

If the entire additional fiscal space of 1.5% of GDP — approximately GH¢27.09 billion — were allocated to capital expenditure, the public investment-to-GDP ratio could theoretically increase from 4.6% to 6.1%, or roughly GH¢109.92 billion.

The critical question is whether the forthcoming budget will deliver an increase of this magnitude or whether the New Economy will largely incorporate projects already included under the Big Push Infrastructure Programme, the 24-Hour Economy initiative and other existing commitments.

If the government is genuinely committed to investment-led growth, the minimum expectation should be that the entire additional fiscal space is channelled into growth-enhancing expenditure, with an increase in capital expenditure from 4.6% to approximately 6.1% of GDP providing a measurable benchmark. The ultimate test, however, is whether this additional spending expands productive capacity, stimulates private investment and creates sustainable employment.

Question Two: How Will the Larger Deficit Be Financed?

A reduction in the primary surplus from 1.5% to 0.5% of GDP would, holding other fiscal aggregates constant, increase the overall cash deficit from approximately 2.5% to 3.5% of GDP.

This raises an important financing question, particularly because Ghana has substantial debt repayment obligations and the government has indicated that it does not intend to return to the international Eurobond market.

The original 2027 financing plan already envisaged an overall cash deficit of GH¢44.64 billion, with net domestic financing of GH¢72.54 billion — split between GH¢46.61 billion from banks and GH¢25.93 billion from non-banks. Net foreign financing was projected at negative GH¢26.33 billion, reflecting external debt amortisation of GH¢35.45 billion against new external project-loan disbursements of only GH¢9.12 billion.

With Eurobond issuance ruled out, additional fiscal financing would likely have to come primarily from the domestic financial market. Under the illustrative scenario, the overall cash deficit would rise to GH¢62.70 billion, and net domestic financing would increase to approximately GH¢90.60 billion — an increase of nearly 25%.

This does not necessarily pose an immediate threat to debt sustainability. The IMF’s July 2026 assessment upgraded Ghana’s debt-distress risk to moderate and projected public debt at approximately 54.9% of GDP in 2027, under a framework incorporating the revised primary surplus target.

The more immediate question is whether the domestic financial market can accommodate the additional borrowing without undermining the recovery in private-sector credit.

The Bank of Ghana’s September 2026 Monetary Policy Report reveals encouraging developments. By August 2026, private-sector credit was growing at 35.5% in nominal terms and 29% in real terms, compared with 13.3% and 1.7% respectively a year earlier. Average lending rates had declined from 24.2% to 15.9%, while banking-sector liquidity remained comfortable.

However, the government’s increased domestic borrowing requirement could compete with this recovery, particularly as private-sector credit demand strengthens. Although domestic liquidity conditions are currently favourable, the Bank of Ghana reports limited activity in longer-term government securities, raising questions about the maturity structure and cost of additional borrowing.

The 2027 Budget must therefore provide a credible domestic financing strategy that demonstrates how the government intends to accommodate higher borrowing while preserving affordable credit for private investment. An investment-led growth strategy would risk undermining its own objectives if increased public borrowing significantly crowded out the private investment it seeks to stimulate.

Question Three: The New Economy and GANRAP

The third question concerns the compatibility of the New Economy with the Ghana Accelerated National Reserve Accumulation Policy (GANRAP), particularly its ambitious target of 15 months of import cover by 2028.

The magnitude and feasibility of this target deserve scrutiny. According to the Bank of Ghana, gross international reserves declined from US$13.83 billion (5.7 months of import cover) in December 2025** to **US$11.07 billion (4.2 months) in August 2026.

At August’s implied monthly import-cover denominator, reaching 15 months would require reserves of roughly US$39.5 billion** — about **US$28.5 billion above the August stock within approximately two years.

Meanwhile, scheduled external debt amortisation is projected to increase from GH¢24.8 billion in 2026 to GH¢35.5 billion in 2027, representing substantial foreign-exchange obligations that must be accommodated alongside the reserve accumulation strategy.

These obligations coincide with the government’s intention to accelerate productive investment under the New Economy, which will likely increase imports of machinery, equipment and intermediate inputs before generating additional export earnings. Consequently, the government faces the challenge of simultaneously financing investment-related imports, meeting rising external debt obligations and accumulating international reserves at an unprecedented pace.

The potential fiscal trade-off is equally important. In the 2026 Mid-Year Budget Review, the government allocated GH¢5 billion to GoldBod while reducing planned capital expenditure by an equivalent amount. Although acquiring reserve assets differs from ordinary expenditure, these adjustments raise questions about the opportunity costs of prioritising reserve accumulation over growth-enhancing investment.

While stronger international reserves and productive investment can reinforce each other over time, the scale and timing of GANRAP’s targets raise legitimate questions about their compatibility with the New Economy.

ASJ Bottom Line

The New Economy represents an opportunity for Ghana to translate recent macroeconomic stability into sustained economic growth. However, its success will depend on whether the government channels the additional fiscal space into genuinely productive investment, finances the resulting deficit without undermining private-sector credit, and reconciles its growth ambitions with GANRAP’s aggressive reserve accumulation targets.

The 2027 Budget must demonstrate that these policy objectives are mutually consistent and, ultimately, capable of delivering higher productivity, employment and household incomes.

The writer is associate professor at Niagara University, NY and Member of Research Committee, Tesah Capital.

Quick Facts

Finance Minister Dr Cassiel Ato Forson presents Ghana’s 2027 Budget on November 12, 2026, with the government promoting a US$10 billion New Economy programme over four years. The primary surplus target is set to fall from 1.5% to 0.5% of GDP, creating fiscal space of about 1% of GDP, with a further 0.5% of GDP expected from revenue mobilisation.

The 2026 Budget already projected capital expenditure at 4.6% of GDP (GH¢82.83 billion) for 2027; if all additional fiscal space went to capital spending, that ratio could rise to 6.1% (GH¢109.92 billion). The overall cash deficit could widen from 2.5% to 3.5% of GDP, pushing net domestic financing from GH¢72.54 billion to about GH¢90.60 billion — a rise of nearly 25% — with Eurobond issuance ruled out.

Reserves fell from US$13.83 billion (5.7 months) in December 2025** to **US$11.07 billion (4.2 months) in August 2026, while GANRAP targets 15 months of import cover by 2028, implying reserves of roughly US$39.5 billion** — about **US$28.5 billion above August levels. External debt amortisation is set to rise from GH¢24.8 billion in 2026 to GH¢35.5 billion in 2027. Private-sector credit grew 35.5% nominally and 29% in real terms by August 2026, with average lending rates down from 24.2% to 15.9%.

Source: Accra Street Journal

Last Updated on November 11, 2026 by Samuel Kwame Boadu

Samuel Kwame Boadu

Samuel Kwame Boadu is a Ghanaian media entrepreneur and storyteller with a passion for amplifying urban voices and uncovering everyday truths. He is the Editor-in-Chief and Founder of Accra Street Journal, a dynamic digital platform dedicated to capturing the pulse of Ghana’s capital—its people, culture, challenges, business, sports and innovations.

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