Ghana is set to gain additional fiscal space equivalent to 1% of GDP from 2027 after the International Monetary Fund (IMF) agreed to a lower primary surplus target, giving the government more room to finance development projects while maintaining its debt sustainability programme.
Under the revised framework, Ghana’s primary surplus target on a commitment basis will fall from 1.5% to 0.5% of GDP.
IMF Resident Representative in Ghana, Dr Adrian Alter, said the adjustment would allow the government to channel an additional one percentage point of GDP into development needs.
“By relaxing the fiscal stance from 1.5% primary surplus on a commitment basis to 0.5% of GDP, that basically allows an extra percentage point of GDP to be spent on development needs starting in 2027,” he said.
The decision marks a shift in Ghana’s fiscal strategy after several years of strict expenditure controls, debt restructuring and efforts to clear arrears following the country’s economic and debt crisis.
Rather than focusing solely on fiscal consolidation, the government will now have greater room to balance debt sustainability with investments in infrastructure, health, education, energy and other productive sectors.
However, the lower surplus target does not mean Ghana is abandoning fiscal discipline. A primary surplus represents the difference between government revenue and expenditure excluding interest payments. Reducing the target to 0.5% means government will save less before interest payments are considered, but it will still be required to maintain a positive primary balance.
Dr Alter noted that the government inherited significant fiscal pressures in 2025, including a large stock of arrears and a wider-than-expected deficit carried over from 2024.
He said government responded by cutting some expenditure while introducing stronger controls, including a commitment authorisation system designed to prevent public institutions from taking on obligations without adequate budgetary provision.
These controls will be critical to ensuring that the additional fiscal space is used effectively.
The extra room could support investments in roads, electricity, ports, digital infrastructure, education and healthcare, potentially improving productivity and reducing operating costs for businesses.
For the private sector, the quality of government spending will be particularly important. Productive public investment can support economic growth, attract private capital and strengthen Ghana’s revenue base over time.
But if the additional resources are absorbed by inefficient procurement, poorly targeted spending or a renewed accumulation of arrears, the opportunity could quickly be lost.
The IMF’s decision also reflects the need to strike a balance between fiscal consolidation and economic growth. While tight fiscal policy can help stabilise debt, excessive or prolonged restraint can limit public investment and weaken economic activity.
For Ghana, stronger economic growth will be essential to sustaining debt reduction. A growing economy expands the tax base, increases government revenue and lowers the debt burden relative to GDP.
The revised fiscal target therefore gives government more room to invest, but it also raises expectations for stronger project selection and public financial management.
The key test will be whether Ghana can turn the additional fiscal space into productive investments that improve living standards and expand the economy without returning to the fiscal practices that contributed to the previous debt crisis.
