Ghana's Minister for Finance, Dr. Cassiel Ato Forson, is set to present the 2027 Budget on November 12, 2026, which is expected to focus on the government's 'New Economy' agenda. This initiative includes a proposed US$10 billion investment programme over four years, targeting infrastructure, agriculture, manufacturing, and other productive sectors. The goal is to translate recent macroeconomic stability into sustained economic growth. Dr. Dennis Nsafoah, an Assistant Professor at Niagara University in New York, has raised concerns about the economic policy challenges associated with this initiative.
Dr. Nsafoah has identified three key economic policy questions that require careful consideration ahead of the budget presentation. Firstly, he questions how much of the announced investment is genuinely new. The 2026 Budget had already projected capital expenditure of 4.6% of Gross Domestic Product (GDP) for 2027, which Dr. Nsafoah considers modest given the economy's significant infrastructure deficits and urgent need for productive investment. He emphasizes the need to determine how much additional investment the New Economy will deliver beyond this already allocated amount.
The second question revolves around how the government plans to finance the larger fiscal deficit resulting from the New Economy initiative. A reduction in the primary surplus target from 1.5% of GDP to 0.5% in 2027 would increase the overall cash deficit from approximately 2.5% to 3.5% of GDP. Dr. Nsafoah notes that this raises important financing questions, particularly given Ghana's substantial debt repayment obligations and the government's reluctance to return to the international Eurobond market.
Dr. Nsafoah's third question concerns the compatibility of the New Economy with the Ghana Accelerated National Reserve Accumulation Policy (GANRAP). GANRAP aims to achieve 15 months of import cover by 2028, which Dr. Nsafoah believes requires scrutiny. Reaching this target would necessitate reserves of roughly US$39.5 billion, approximately US$28.5 billion above the August 2026 stock within two years. This ambitious target coincides with scheduled external debt amortisation and the government's intention to accelerate productive investment under the New Economy.
The government faces the challenge of simultaneously financing investment-related imports, meeting rising external debt obligations, and accumulating international reserves at an unprecedented pace. Dr. Nsafoah highlights the potential fiscal trade-off, citing the 2026 Mid-Year Budget Review, where the government allocated GH¢5 billion to GoldBod while reducing planned capital expenditure by an equivalent amount. He questions the opportunity costs of prioritising reserve accumulation over growth-enhancing investment.
Dr. Nsafoah emphasizes that 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. He stresses that the 2027 Budget must provide a convincing explanation of how the government intends to reconcile these competing demands without constraining productive investment and economic growth.
Ultimately, Dr. Nsafoah concludes that the 2027 Budget must demonstrate that the policy objectives of the New Economy and GANRAP are mutually consistent and capable of delivering higher productivity, employment, and household incomes. The government's ability to address these economic policy challenges will be crucial in determining the success of the New Economy initiative and Ghana's economic growth trajectory.
Key points
- Dr. Dennis Nsafoah raises three key economic policy questions about the government's 'New Economy' initiative.
- The questions concern the genuineness of the announced investment, financing of the larger fiscal deficit, and compatibility with GANRAP.
- The 2027 Budget must provide a convincing explanation of how the government intends to reconcile competing demands without constraining productive investment and economic growth.
